Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Infant Mortality

Mr. Gareth Wardell: asked the Secretary of State for Wales what was the infant mortality rate in 1979 in (a) West Glamorgan and (b) Wales; and what are the corresponding figures for the latest available year.

The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): The infant mortality rate for West Glamorgan was 14·3 per thousand live births in 1979 and the corresponding rate for Wales was 12·4 per thousand live births. By 1984, the latest year for which this information is available, these rates had fallen to 6·1 and 8·8 respectively.

Mr. Wardell: Why is a new perinatal intensive care unit not recognised by the Secretary of State for Wales as a need for Wales, whereas it is accepted as a need for all the English regions? The perinatal mortality rate in Wales is higher than that in England. Therefore, why is the Secretary of State content that mothers of babies in Wales should have a worse deal than mothers in England?

Mr. Robinson: The pattern of existing maternity and neo-natal services is being given a detailed examination

under the perinatal mortality initiative announced by my right hon. Friend the Secretary of State, and we shall be considering the survey group's recommendations later in the year.

Mr. Gwilym Jones: The figures that my hon. Friend has given are encouraging. What is the status of the perinatal mortality initiative undertaken by the Welsh Office?

Mr. Robinson: Under the initiative, a catalyst team is compiling an up-to-date assessment of existing maternity and neonatal services, stimulating clinical reviews of perinatal deaths and encouraging health authorities to set up active maternity service liaison committees. In addition, the expert survey group appointed by my right hon. Friend the Secretary of State is preparing an, all-Wales perinatal mortality survey, and that will form part of the group's report to the Department this year.

Hospitals

Dr. Marek: asked the Secretary of State for Wales how many National Health Service hospitals in Wales there were in 1978; and how many there are now.

Mr. Mark Robinson: There were 178 NHS hospitals in Wales at 31 December 1978 and 164 now.

Dr. Marek: Are there not now fewer staffed hospital beds in Wales than at any time since the inception of the NHS? What is the Minister going to do about it?

Mr. Robinson: The hon. Gentleman should remember that we have been through one of the biggest hospital building programmes in the history of the Principality. As regards the drop in the numbers of beds, over 1,000 can be attributed to our mental health initiative to get people back into the community. Under that initiative there has been a reduction of nearly 1,000 in the number of beds available to mental health, compared with 1,329 overall.

Mr. Harvey: How many community hospitals have been opened in Clwyd since 1979?

Mr. Robinson: I shall write to my hon. Friend and give him that figure.

Mr. Alex Carlile: What proposals does the Minister have for the provision of more consultant beds in hospitals in rural Wales?

Mr. Robinson: We feel that the figures for consultant beds are satisfactory.

Mr. Raffan: Does my hon. Friend agree that just as important as the quantity of hospitals is their quality and the level of facilities and standard of care that they are able to provide? Is he aware of the widespread appreciation in Delyn of the fact that the Government have made available the necessary financial resources to transform three out of our four community hospitals, the new one at Mold being nationally recognised as a model for future community hospital developments?

Mr. Robinson: My hon. Friend is absolutely right to point that out. I am sure he will be pleased to note that under this Government the reduction in the number of beds is less than it was in a similar period under the Labour Government.

Mr. Roy Hughes: Does the Minister appreciate that doctors, nurses and ancillary staff are up in arms about the administrative changes that have followed the implementation of the Griffiths report? Does he appreciate that they feel that their professionalism is being undermined and often completely disregarded? As one constituent put it to me, it is a matter of life or death versus financial restrictions. How does the Minister reconcile that with the Prime Minister's famous statement that the National Health Service is safe in her hands?

Mr. Robinson: Many more patients are now being treated in Wales than was the case when this Government came to office. Part and parcel of the campaign by the Royal College of Nursing is that it feels that it is not being included in the reorganisation proposals. Last week I visited south Glamorgan, where it was pointed out to me that one of the appointments that had been made had come from the nursing profession.

Mr. Wigley: It is all very well for the Under-Secretary of State to say that the new district general hospitals have led to the closure of some old hospitals, which has happened in some instances, but does he accept that hospitals which it was assumed would continue to function when the district general hospitals were being planned are now having to be closed because of a lack of resources? If he contests that point, will he assure us that there will be no such closures until he has completed his rounds of the area health authorities in Wales?

Mr. Robinson: As the hon. Gentleman is aware, the distribution and use of resources is a matter for individual health authorities. However, before any closure or any major change of use can take place, there has to be public consultation. If there is a weight of objection, my right hon. Friend the Secretary of State for Wales has to consider the matter. I assure the hon. Gentleman that the statutory procedures will continue to apply if any proposals for closures are put to us by the district health authorities.

Labour Statistics

Mr. Roy Hughes: asked the Secretary of State for Wales if he will give details of the most recent published figures of unemployment in Newport and Wales.

The Secretary of State for Wales (Mr. Nicholas Edwards): On 12 December 1985 the number of unemployed claimants in the Newport travel-to-work area and in Wales totalled 12,765 and 181,496 respectively.

Mr. Hughes: Does the Secretary of State appreciate that the recent rise in the base lending rate of the clearing banks to 12·5 per cent. is the highest this century and that unemployment in Gwent and in the whole of Wales now stands at 17 per cent.? Does he realise that, because of the Government's policies, it can be said that Wales is being murdered? Why does he not call for a change in these policies? If he cannot change them, he should get out.

Mr. Edwards: Of course I am concerned about the high levels of unemployment, but it is wrong to pretend that Wales is being murdered. In 1985 Wales obtained a very high proportion of the inward investment in this country. In fact, 48 overseas projects have been secured. If that is not of interest to the hon. Gentleman. I am sure he will be pleased to hear that well over 2 million sq ft of Government factory space has been allocated to Wales. Again, that is very near to the all-time record.

Mr. Grist: Will my right hon. Friend give a lecture to Opposition Members on the relationship between high pay rises, inflation and unemployment? Will he tell them that if we go on paying ourselves above the rate of inflation and more than our competitors we shall have higher interest rates and higher unemployment?

Mr. Edwards: For the first time for many decades we have had a prolonged period of substantial growth in the economy, combined with falling inflation. That offers by far the best prospect for future job creation and lower unemployment.

Mr. Rowlands: Does the Secretary of State recall the speech that he made when he mentioned the great gulf between City financing and industrial Britain? Was not the perfect illustration of that the behaviour of County bank with its ultimatum to withdraw money from the Berlei company? Has the right hon. Gentleman put any proposals to his colleagues to prevent such outrages recurring?

Mr. Edwards: As the hon. Gentleman knows, County bank responded to my request for further time to consider the matter. The hon. Gentleman knows that I do not answer for the conduct of County bank. It must be a matter for commercial judgment. I am sure that the hon. Gentleman shares my pleasure in the fact that the company has now been bought from the receiver. As a subsidiary of the Courtaulds group, there are good prospects for its future business.

Sir Raymond Gower: Unemployment is a continuing cause of concern for all of us, but does not industry in Wales, as in the rest of the United Kingdom, now have an unparalleled opportunity to expand?

Mr. Edwards: Much industrial investment is taking place at the present time. The allocation of factory space is at, or near, record levels. We continue to secure a high proportion of inward investment from overseas. There is a greater diversity in the Welsh economy today than there has been for many decades—indeed, this century.

Mr. Williams: If the period of growth has been as impressive as the Secretary of State describes, how does he explain to those of us who do not see it that way that


manufacturing output is still below the level at which it was when the Government came to office, and lower than it was 11 years ago at the time of the three-day week?

Mr. Edwards: My answer follows my reply to my hon. Friend the Member for Vale of Glamorgan (Sir Raymond Gower). For the greater part of this century Wales has been over-dependent upon steel and coal. Those industries have been substantially reduced, but I am glad to say that, as a result of massive investment in the British Steel Corporation and a startling improvement in performance and productivity, the future for the steel industry is better than it has been for many years.

Mr. Foot: As the right hon. Gentleman still believes that the Government's policy is a glowing success, will he tell us when it will be translated into helpful unemployment figures? When will the areas that have suffered 20 per cent. unemployment or more since the Government came to office see the product of the Government's policy?

Mr. Edwards: I have told the right hon. Gentleman on many occasions that I do not make forecasts of unemployment figures, any more than he did when he had responsibility for such matters.

Welsh Coalfield

Mr. Coleman: asked the Secretary of State for Wales if he will give details of the matters relevant to the Welsh coalfield which he discussed with the chairman of the National Coal Board at their meeting on 14 November.

Mr. Nicholas Edwards: Our discussions ranged widely over the situation of the coal industry in Wales and the activities of NCB (Enterprise) Ltd.

Mr. Coleman: Will the right hon. Gentleman make it abundantly clear to the National Coal Board that in no circumstances can investment in pits in south Wales be used as a means of industrial blackmail to secure the closure of other collieries? Does he recognise that the serious position is exacerbated by the closure, announced last Friday, of the Metal Box works at Neath, which is also a coal mining area?

Mr. Edwards: Any industrial closure or reduction in employment worsens the position. However, the question refers to the coal industry, which has been losing large sums of money in Wales—more than £600 million since the Government came to office. I am sure that the hon. Gentleman welcomes the reduction in losses, the sharp improvement in productivity and performance and the fact that investments totalling £50 million have been announced this year. The National Coal Board expects to spend about £45 million on capital schemes in Wales in 1986–87.

Sir Anthony Meyer: Can my right hon. Friend estimate the number of jobs that have been lost as a result of markets that were lost during the year-long coal strike?

Mr. Edwards: The coal strike had a damaging effect on the industry and has been a factor in the acceleration of pit closures since then.

Mr. Barry Jones: Does the right hon. Gentleman accept that with the closure of nine pits and the loss of 3,500 jobs in less than a year, economically the coalfield is near to breaking point? I remind him that male

unemployment in Mid Glamorgan is more than 25,000, or an awesome 23 per cent. The loss of jobs at Metal Box at Neath is a development of the utmost gravity. During his term of office, Neath has lost 1,300 jobs in double-quick time. What does he propose to do about it?

Mr. Edwards: The south Wales coal industry was being broken by its many old, loss-making pits. It was making enormous losses, and there was no way in which new investment could be funded while losses were at that level. The great improvements in the performance of the coalfield means that more investment is coming forward. The hon. Gentleman will welcome the efforts of NCB (Enterprise) Ltd., which supports 13 enterprise agencies and has announced support for some 56 projects worth about £10 million. It has a further £15 million available from the original tranche that was announced for future good projects.

NHS Resources

Mrs. Clwyd: asked the Secretary of State for Wales if he will make a statement on the formulae and methodology used to allocate resources for the National Health Service in Glamorgan and other area health authorities in Wales.

Mr. Mark Robinson: Formulae are used to assist in determining the distribution of the available resources among district health authorities. Those formulae are kept under review by a resource allocation working group, on which the authorities are represented.

Mrs. Clwyd: Does the Minister agree that unemployment in Mid Glamorgan is almost the highest of any county in Wales, that there is an established link between unemployment and ill health, that those factors are not being taken into account as either social or economic factors, and that the resources available to Mid Glamorgan area health authority are inadequate to deal with the health demands of that county?

Mr. Robinson: We do not accept that there is such a link. In terms of the adequacy of resources available to Mid Glamorgan health authority, the equalisation formula shows that Mid Glamorgan is within 0·1 per cent. of equalisation.

Mr. Best: My hon. Friend's officials are considering sparsity and whether there could be a better formula than length of roads for areas such as Gwynned. When are those considerations likely to be completed, and when will we get a better assessment of sparsity?

Mr. Robinson: The resource allocation working group will resume its work on the next round of allocations, when all those factors will be considered.

Mr. D. E. Thomas: The Minister told us earlier that allocation and distribution of resources within authorities was a matter for those authorities, but what is his response when the authorities tell the public that inadequate allocation from the Welsh Office has forced them to propose closures?

Mr. Robinson: As resources to the Health Service in Wales have increased by nearly 22 per cent. since 1979, we cannot accept the argument that inadequate resources from the Welsh Office are responsible for the problems


that some health authorities say they have. As I have said many times, the health authorities must manage the resources that are allocated to them.

Mr. Gwilym Jones: In his considerations, how much does my hon. Friend take into account the willingness of health authorities to make the best use of the resources available to them?

Mr. Robinson: We do not take that factor into account when allocating resources. Of course, we take it into account when we consider centrally distributed resources.

Mr. Ron Davies: Does the Minister realise that his complacency is directly contradicted by the experience of people who live in Mid Glamorgan and who require the services of the NHS? I refer him especially to the case of a constituent who went for a cervical smear test in January and was advised at the surgery not to bother making further contact for three months because the National Health Service did not have the money to carry out the test. How can he say that he is satisfied with the funding of the National Health Service when such delays can occur?

Mr. Robinson: If a patient being treated by the health authority has a complaint about the way in which he or she has been treated, he or she has a right to submit that complaint, which will be considered through the statutory processes. There are problems with waiting lists, and the Welsh Office is helping the health authority to consider ways in which to reduce them.

Mr. Rogers: Does the Minister accept that between his pathetic excuses and fiddling figures there is a great need for more resources in the valleys of south Wales? When he visits Mid Glamorgan hospitals, which he proposes to do this week, will he look closely at the needs of the people there?

Mr. Robinson: Regarding the resources available for health services in Wales, any factors within the terms of the resource allocation working group which lead to any increase in resources to Mid Glamorgan—for example for social deprivation—will inevitably lead to a reduction in the resources available to other authorities. I can only repeat what I have said before, that there has been an increase in resources to the NHS in Wales of nearly 22 per cent.

Factory Units (WDA)

Mr. Knox: asked the Secretary of State for Wales how many factory units have been built by the Welsh Development Agency since its inception.

Mr. Nicholas Edwards: Between January 1976 and December 1985 inclusive, the Welsh Development Agency completed 1,239 advance factory units, 20 bespoke factory units and 92 factory extensions, totalling more than 9·6 million sq ft.

Mr. Knox: How many factories has the agency built on average each year since the present Government came to office, and how does that compare with the figures under the Labour Government?

Mr. Edwards: Of the 1,351 factories and extensions completed by the agency, 1,167 have been built since May 1979. Under the Labour Administration the agency completed an annual average of 56 factories and extensions, totalling 500,000 sq ft. Under this

Government the annual average has increased to 177 completions, totalling 1·2 million sq ft of factory space. What is more, we have been getting that factory space allocated.

Mr. Wigley: Will the Secretary of State confirm that the Government have commissioned two independent studies into the future of the Welsh Development Agency? Will he assure us that none will lead to the privatisation of any of its functions?

Mr. Edwards: I always welcome constructive ideas and read with interest the proposals of the hon. Member for Alyn and Deeside (Mr. Jones) that we might privatise the agency, but that proposition has not been discussed or considered in the Welsh Office, and I have no plans to do anything of the sort.

Mr. Harvey: I congratulate my right hon. Friend on that remarkable achievement and deplore the failure of the Labour Government to spend money on these projects, but what has been the average take-up rate of the units?

Mr. Edwards: At present the vacancy rate is about 12 per cent., which has decreased from 13·6 per cent. a year ago. Most property companies in the private sector would not think that those were unreasonable figures, bearing in mind the range of premises.

Mr. Ray Powell: Does the Secretary of State recall that at Question Time on 21 October last we devoted considerable time to the Parrot Corporation and the involvement of the right hon. Gentleman? Is he now prepared to make a statement to the House about the investigations carried out by Baker? If, as. we discovered last week on Westland, we must continually probe to get at the truth of this issue, will the Secretary of State accept that it is his responsibility to ensure that the Welsh Development Agency conducts its business properly? In view of all the questions that were asked, surely he should have come to the House with a statement, and not tried to hide behind a reply to a written question from his former Parliamentary Private Secretary

Mr. Edwards: As the hon. Gentleman said, I have answered the question. The proper course of events would be for the National Audit Office, and then the Public Accounts Committee, to pursue the matter if they considered that to be appropriate. There are well-known procedures for the PAC to carry out such an investigation while maintaining commercial confidentiality, which I am anxious should be maintained. We should not prejudice the police inquiries that are taking place and any actions by the Director of Public Prosecutions.
The company is in production, and it is selling its products. It is manufacturing a first-class British product and I am concerned that it should go from strength to strength. I hope that hon. Members on both sides of the House will help the company to build on the foundations that it has laid and so to provide jobs in the area in future.

Mr. Best: Does my right hon. Friend accept that factory units in north Wales need good roads to provide access? When will we have his conclusion on the report of the consulting engineers into bypasses along the A5 on Anglesey, which his office has received?

Mr. Speaker: Order. The hon. Gentleman's supplementary question does not relate to factory units built by the Welsh Development Agency.

Mr. Coleman: The building of factory units in Wales is always to be welcomed, but does the Secretary of State agree that it is time he urged upon the Cabinet a change in the Government's policy on financial intervention? Do not the redundancies declared on Friday at Metal Box at Neath underline the importance of resolving these matters?

Mr. Speaker: Again, the supplementary question does not relate to factory units built by the Welsh Development Agency.

Mr. Barry Jones: The right hon. Gentleman is evasive and unconvincing about the Parrot Corporation. Does he agree that there must be a full parliamentary inquiry into the scandal, perhaps by the Welsh Select Committee? We are still deeply suspicious of the alleged independence of what was an internal inquiry. The right hon. Gentleman may well he hiding behind the skirt of an insufficient inquiry. Does he understand that we require more information than has so far been given about the police investigation of the affair? If no more details are forthcoming, the House will expect to see published a full report of the investigation undertaken by Douglas Baker on behalf of the Secretary of State. Why did the right hon. Gentleman not ensure that there were adequate investment appraisal and risk analysis techniques? His limp control has dented the agency's reputation and undermined its status in the City. The right hon. Gentleman should take full responsibility for this disgraceful state of affairs.

Mr. Edwards: I hope that in his opening remarks the hon. Gentleman was not casting any doubt on the integrity and independence of a distinguished accountant who is the chairman of a major firm of accountants. Mr. Baker found that the collateralised deposit was an unusual transaction from a commercial point of view and that it could not reasonably have been anticipated by the agency. The hon. Gentleman suggests that if he had been looking after matters he would have spotted what an eminent accountant believes he himself might have failed to spot. However, I am certain that the proper way to proceed with the questions which the hon. Gentleman—[Interruption.] The hon. Member for Alyn and Deeside (Mr. Jones) who asked the question, is not listening to my answer. Instead, he is jabbering away to his neighbour—[Interruption.]

Mr. Speaker: Order. Time is getting on.

Mr. Edwards: If the hon. Gentleman wants answers to his questions, the proper way to proceed is through the Public Accounts Committee, which was established by the House. I am certain that we should all be concerned that the company, which is now in production, continues and proves to be a great success.

Delyn Enterprise Zone

Mr. Raffan: asked the Secretary of State for Wales if he will agree to Delyn borough council's application to extend the Delyn enterprise zone to include No. 1 and No. 2 sites at what was formerly Courtaulds, Greenfield.

Mr. Nicholas Edwards: I have received an application from Delyn borough council for the extension of the Delyn enterprise zone to include the Courtaulds Greenfield site. I shall, of course, give very careful consideration to this, but I could not now anticipate the outcome.

Mr. Raffan: As regards the application to extend the zone, will my right hon. Friend take account of the fact

that only 136 acres out of the 260 at present included in the zone are available for industrial development? Does he agree that the availability of land within the zone is crucial if the efforts now being made to rebuild Delyn's industrial base are to succeed?

Mr. Edwards: I can certainly take full account of the points that my hon. Friend has put to me. As he knows, we are honouring our commitment to support the borough council's efforts to develop the enterprise zone at Delyn and to create alternative employment opportunities there. We have announced special capital applications of £1·8 million for the continued development of the zone, and we shall be announcing urban programme allocations shortly.

Mining Industry

Mr. Ray Powell: asked the Secretary of State for Wales how many jobs have been lost in the mining industry in Wales since 5 March; and how many pits have been closed.

Mr. Nicholas Edwards: Between 5 March 1985 and 11 January 1986 the number of men on colliery books fell by 5,691. Nine pits closed, and there were two mergers.

Mr. Powell: Does the Secretary of State now accept that it was not a miners' strike, or a "Scargill strike'', but that it was a miners' strike supported by miners, particularly those in my constituency, who knew that if they were not prepared to fight for their jobs they would lose them? Since they went back to work in March we have lost 5,000 jobs, 1,500 of them in my constituency. Will he now tell me that he will ensure that the National Coal Board at Cardiff will not put further pressure on those still left in my constituency at the Coedely colliery by using, as my hon. Friend the Member for Neath (Mr. Coleman) said, industrial blackmail to force them to accept redundancies and closure at that colliery otherwise no investment will be put into the Cwm colliery? Will he take that matter up with the board?

Mr. Edwards: What is absolutely clear is that many of the south Wales pits have been uneconomic for a long time. As the hon. Gentleman knows, closures have continued under successive Governments. What is equally clear is that the Scargill strike, which he so strongly supported, has led to an acceleration of that programme of closures and to more job losses in the time scale than would otherwise have taken place.

Mr. Gwilym Jones: Does not my right hon. Friend agree that it would be worth while for all right hon. and hon. Members to go to the Upper Waiting Hall at 4 o'clock this afternoon to see the exhibition of NCB (Enterprise) Ltd.? They will see there the excellent efforts made and the worthwhile results achieved, and will realise that NCB (Enterprise) is now being viewed as a most creditable achievement by Her Majesty's Government.

Mr. Edwards: As I have already pointed out, it is doing some valuable work—56 projects worth some £10 million, to which it has provided aid of some £1·25 million already. When I gave my earlier answer, I referred to £10 million. That is the total value of those projects. The company is also supporting enterprise agencies and helping to create 1,400 or more jobs in projects that it has already announced in Wales.

Labour Statistics

Mr. Ron Davies: asked the Secretary of State for Wales what is the proportion of unemployed in Wales who have been continuously unemployed for more than 12 months.

Mr. Nicholas Edwards: On 10 October 1985, the latest date for which these figures are available, the proportion was 42·4 per cent.

Mr. Davies: Has the Secretary of State any new initiative to deal with this problem?

Mr. Edwards: The hon. Member will be aware that there is a whole string of initiatives, including those concerning the community programme, where the number of places available in Wales—over 20,500 to be allocated by June this year—is more than double the total available in April last year. There are some 43,000 people currently covered by special employment and training measures in Wales, and we shall continue to press on with making a success of the wide range of measures that the Government have introduced.

Mentally Handicapped People

Mr. Grist: asked the Secretary of State for Wales what relationship his Department intends as between the all-Wales strategy for the development of the mentally handicapped and the Education Act 1981.

Mr. Mark Robinson: The all-Wales advisory panel has established a sub-group to study education aspects of the strategy, and education interests are represented on it. I have no doubt that, when it reports later this year, it will give further advice on the relationship between the strategy and the Education Act 1981.

Mr. Grist: Is my hon. Friend aware that there is much dissatisfaction among education authorities over this matter and that there is great concern among many parents of handicapped children, who fear the end of special schools in favour of wholesale integration of such children into ordinary schools?

Mr. Robinson: I am not aware of dissatisfaction per se among the education authorities. After all, it is for them to establish their priorities. However, I am aware of certain dissatisfaction along the lines that my hon. Friend suggests, in South Glamorgan. This is a matter for parents to resolve with the education authority, but we are following the situation closely.

Hospital Provision (Mid Glamorgan)

Mr. Allan Rogers: asked the Secretary of State for Wales what recent representation he has had about hospital provision in Mid Glamorgan; and if he will make a statement.

Mr. Mark Robinson: The most recent representations that I have received relate to the Mid Glamorgan health authority's rationalisation proposals. These have not yet been finalised, but if they involve any permanent closures they are subject to consultation procedures and submission to my right hon. Friend. I cannot therefore comment on them at this stage.

Mr. Rogers: Will the Minister accept that outside all the rationalisation proposals and the fiddling of figures and

formulae and so on, there is an enormous need in the south Wales valleys for investment in new hospitals, rather than that existing ones should be closed?

Mr. Robinson: The hon. Gentleman is obviously not aware that we have in fact been building new hospitals.

Mr. Rogers: Where?

Oral Answers to Questions — CHURCH COMMISSIONERS

Bishop of Durham

Mr. Greenway: asked the hon. Member for Wokingham, as representing the Church Commissioners, how many staff are employed by the Church Commission in the service of the Bishop of Durham, at what cost, what is the nature of their duties; and if he will make a statement.

The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): None Sir, but there are five full-time or part-time staff in the service of the Bishop of Durham. There are two secretaries, a chaplain, a chauffeur/ handyman and a gardener. The cost to the commissioners is £23,405 per annum.

Mr. Greenway: I find it surprising that, in view of some of the things that the Bishop of Durham has said, he allows himself to live in a palace that has cost nearly £1 million in 10 years to maintain, and that he enjoys a staff costing some £23,000 to the commissioners and many thousands more to church people. Is it not a case of people in glass houses not throwing stones? Let him think about that.

Sir William van Straubenzee: Of course I shall think of anything that my hon. Friend says, but I have compared the staff with those of other bishops, and it is very much in line with them. We must remember that the bishop lives in a great and historic house. It costs a large sum of money to maintain, but I am confidently told that it would cause great distress in the area if the bishop were to vacate it for the time being.

Mr. Ryman: Despite the sanctimonious and sycophantic question of the hon. Member for Ealing, North (Mr. Greenway), does the hon. Gentleman appreciate that the Bishop of Durham has done a great service to the people of the north-east of England by drawing attention to the fact that, as a result of the Government's unemployment policy, unemployment in the north-east has risen by an astronomic amount, and that the general social conditions there compared with the south are deplorable? Ought not the Bishop of Durham to be congratulated on drawing attention to those matters?

Sir William van Straubenzee: Those comments only lead me to say that I hope I shall never be commended by the hon. Gentleman.

Mr. Cormack: Are we to take it from the last remarks that the Bishop of Durham rides to hounds? Can my hon. Friend assure us that the Bishop of Durham's chaplain holds entirely orthodox beliefs?

Sir William van Straubenzee: I am not responsible for the chaplain. In fact, he is no charge to the commissioners. In reply to the first part of the question, I do not know anything about the bishop's leisure time activities.

Mr. Rogers: Does the hon. Gentleman accept that Christians have a view on the social problems, such as unemployment, that face us, especially when they afflict communities, and that it is a Christian virtue for any bishop to stand up and comment when the Government carry out such policies?

Sir William van Straubenzee: I have always stood up for the right of bishops to express their views in whatever way they choose. The only reservation that I have had was if they appeared to be fundamentally deviating from Christian tendencies.

Mr. Colvin: Will my hon. Friend tell the House whether deaconesses in the service of the Bishop of Durham are likely to see legislation during this Parliament on the matter of their ordination?

Sir William van Straubenzee: I congratulate my hon. Friend on his ingenuity. The House will be asked to consider a measure which concerns deaconesses. I do not expect that the House will be asked to consider it before Easter.

Mrs. Kellett-Bowman: I agree that bishops are entitled to their views on social policy. Is my hon. Friend aware that many people in the diocese of the Bishop of Durham are apprenhensive about his theological views? As some people are now expressing anxiety that he should not confirm their candidates for confirmation, is it likely that his staff will be reduced pro rata?

Sir William van Straubenzee: I do not think the staff work on the basis of results in that way.

Sunday Trading

Mr. Peter Bruinvels: asked the hon. Member for Wokingham, as representing the Church Commissioners, if, pursuant to his answer to the hon. Member for Leicester, East of 18 November, Official Report, column 14, the Church Commissioners have yet made a statement of their policy towards the proposed deregulation of Sunday trading.

Sir William van Straubenzee: The commissioners are very conscious of the view expressed by the General Synod on this issue, which has been pressed so eloquently in another place. The commissioners are drawing this view to the attention of those retail companies in which they are shareholders. They are asking those companies how they feel about the whole issue.

Mr. Bruinvels: I welcome the answer given by my hon. Friend. It is important for the Church Commissioners to declare a view, because they may be considered hypocritical, in that they have £240 million invested in shopping precincts in Gateshead, Ipswich and Glasgow and in many companies that wish to open on Sundays, such as Habitat and British Home Stores. Will my hon. Friend make it clear to the Church Commissioners that, by last week, 16,292 people had written to the Home Secretary expressing concern about Sunday trading? Only 27 of those people were in favour. Does that not show that the public do not want to go to the shops on a Sunday?

Sir William van Straubenzee: The reasons set out by my hon. Friend were some of those that moved the Church Commissioners to take the steps that I have given in my answer. It will be interesting to see what response we

receive. I am aware of the immense strength of feeling on the issue. The architect of the Bill was a previous Home Secretary. I think that it was a disastrous misjudgment.

Mr. Frank Field: Would it not a matter for concern if the commissioners had a view on this subject? Do we not have a right to look to the Synod for that view, and not to the commissioners?

Sir William van Straubenzee: That is partly the reason why it is the General Synod's view that has been drawn to the attention of the various retail groups that I have described. I think that from time to time, and on appropriate occasions, the Church Commissioners are also expected to hold views on the matter of their investments, and they do.

Mr. Best: Will the Church Commissioners take into account the fact that in the mid-west of the United States of America and in Scotland, where there has been Sunday trading for a long time, people are not noticeably irreligious? Will they also take into account the fact that the churches are open on Sunday?

Sir William van Straubenzee: I think that in Scotland the situation will be dramatically different if there is no restriction of any kind in England. I do not believe that that will stop at the borders. It will go northwards in a way that people will find unpleasant.

Mr. Ryman: The hon. Member has been asked about the shares owned by the Church Commissioners Do the Church Commissioners own any shares in Westland helicopters? Did they attend the meeting at the Albert hall recently? Which option do they prefer, if any, and which half of the Conservative Cabinet do they support?

Mr. Speaker: Order. We are discussing Sunday trading, but I will allow that question because I am interested.

Sir William van Straubenzee: I hope that I am giving an accurate answer. I shall write to the hon. Gentleman. I believe that the commissioners have no shares in Westland. I am sure that if they had taken part in the meeting they would have been very prayerful before they went.

Oral Answers to Questions — WALES

Planning Policies

Mr. D. E. Thomas: asked the Secretary of State for Wales what initiatives his Department has taken on planning policies; and if he will make a statement.

Mr. Mark Robinson: The Welsh Office and the Department of the Environment have jointly taken planning policy initiatives, mainly aimed at removing unnecessary controls and improving and speeding up the operation of the planning system. In addition, the office is consulting on the draft circular on housing in Wales for senior management referred to in my reply to my hon. Friend the Member for Vale of Glamorgan (Sir R. Gower) on 9 December.

Mr. Thomas: Does the Minister accept that the Welsh Office, under his right hon. Friend's tenure, is the most interventionist in terms of planning policy that Wales has seen since the inception of the Welsh Office, and that his


intervention amounts to interference in the opportunities that local planning authorities have to pursue planning policies and housing development related to local needs?

Mr. Robinson: I do not accept that my right hon. Friend is interventionist in his planning policies. As I am sure the hon. Member is aware, it is open to anyone who has an application turned down to appeal to the Welsh Office. The normal practice is for an inspector to be appointed to consider the case.

Oral Answers to Questions — THE ARTS

Tax Incentives

Mr. Proctor: asked the Minister for the Arts when he will be able to make a statement concerning tax incentives to benefit the arts.

The Minister for the Arts (Mr. Richard Luce): Tax incentives are a matter for my right hon. Friend the Chancellor of the Exchequer. This Government have already reduced rates of personal and corporate taxation and reduced the rate of capital transfer tax. The arts have benefited from these and other measures, including a reduction in the covenanting period for gifts to charities. We shall continue to look for improvements.

Mr. Proctor: I congratulate my right hon. Friend on his appointment as a Privy Councillor. Has he seen the article on page 3 of The Times today headed:
Charity aid tax scheme proposed"?
Will he make strong representations to our right hon. Friend the Chancellor of the Exchequer in support of the measures set down there?

Mr. Luce: I am most grateful to my hon. Friend for his first remark. As to his second remark, I have, of course, seen the article in The Times. As he will be aware, this is principally a matter for my right hon. Friend the Chancellor of the Exchequer, but the Government have already done a great deal to encourage giving to charitable bodies. I believe that everything possible should be done to improve that still further.

Mr. Rathbone: Will my right hon. Friend bear in mind, when he talks to the Chancellor of the Exchequer about those matters, that there is agreement across the Floor here, amongst all parties and throughout the arts world, that the future of our heritage in art and architecture rests upon charitable giving being made tax-deductible along the lines described in the article? Will he encourage the Chancellor to that view?

Mr. Luce: I note what my hon. Friend says. Of course I want to see everything possible being done to improve encouragement for arts bodies. Much is being done. I have noted that there was a strong, unanimous report on the subject of tax incentives by a previous Select Committee that deal with these matters. I have taken note of that report.

Business Sponsorship

Mr. Chapman: asked the Minister for the Arts what recent representations he has received about the progress of the business sponsorship incentive scheme.

Mr. Luce: All the representations that I have received recently have praised the progress of the scheme.

Mr. Chapman: Does my right hon. Friend agree that, generally, local authorities could do much more to promote business sponsorship of the arts in their communities? Does he further agree that many could follow the example set by Barnet and appoint an arts officer with responsibility to encourage the business sponsorship incentive scheme?

Mr. Luce: I agree with my hon. Friend. Local authorities can do a great deal. His borough of Barnet has set a lead. I was glad to meet representatives from there. including the arts officer, and was able to congratulate them on the lead that they had taken.

Mr. Hardy: While support is always to be welcomed, does the Minister accept that in those areas where business is struggling to survive, or may have already disappeared, it will be harmful for too much to be expected? Does he agree that he needs to be careful to avoid being divisive or dangerous, in a regional sense, in that matter?

Mr. Luce: I wish to see as much support as possible for the arts in all areas. I attach great importance to all regions in this country, including the north. I have made two visits to the north-east. I understand the point that the hon. Gentleman made. It is up to businesses to decide whether they can make those contributions. They must always remember that they can offset them for tax purposes if they can be categorised as marketing and advertising.

Mr. Cormack: Does my right hon. Friend accept that, welcome as his support is for the business sponsorship, and much as I applaud and encourage it, the solution to the problem lies in a satisfactory answer to the first arts question on the Order Paper? Does he accept that we are glad that he referred to the Select Committee report? Has he yet made any progress in convincing the Chancellor of its merits?

Mr. Luce: I am aware of the strength of my hon. Friend's views on this subject. He played a leading part in the Select Committee which came up with views about the need for further changes. We have already made progress—my hon. Friend acknowledges that—but this is a matter principally for my right hon. Friend the Chancellor. The Government are, however, committed to improving incentives for giving to arts and charitable bodies.

Mr. Jessel: As this highly successful scheme is a great credit to the sponsoring firms in association with the Government and arts bodies, will the Government consider means of extending the scheme to include capital projects?

Mr. Luce: I cannot give an understanding on that, but I am glad that I have been able to increase the budget of the business sponsorship incentive scheme substantially, from £1 million this year to £1·75 million in the coming financial year. I hope that that will be a major encouragement to business to sponsor the arts even more.

South Bank

Mr. Tony Banks: asked the Minister for the Arts if he has received any requests from the Arts Council for additional funding for the South Bank arts complex; and if he will make a statement.

Mr. Luce: The Arts Council included the needs of the South Bank arts centre in its general statement of funding requirements and I took these into account in determining the figure of £25 million for post-abolition funding which I announced on 14 November 1985.

Mr. Banks: Is the Minister aware that there has been a reorganisation over at the Royal Festival hall by the South Bank board, which has resulted in the general administrator, a GLC employee on £23,000 a year, being sacked and the appointment of two general administrators and nine additional directors on salaries ranging from £22,000 to £35,000 a year? Is he further aware that blue collar workers have not been told what jobs they will have, except that 60 of them will be declared redundant? Does the Minister believe that that is how to handle the situation post-abolition? Does he agree that it is a disgraceful example of the Arts Council creating jobs for itself?

Mr. Luce: I have great confidence in the new South Bank board under the leadership of Ronnie Grierson. It is determined to make an exciting job of the future for the South Bank and I believe that there is every prospect of that happening. We are still waiting for figures of the Arts Council's allocation. It is for the board to decide what staff it should have. I ask the hon. Gentleman to remember that its responsibilities are much larger than those of the GLC until 1 April. They include the whole of the South Bank, whereas the GLC covers only three concert halls.

Mr. Buchan: Does the Minister remember that when the Government took the foolish and malicious decision to abolish the GLC it was on the ground that it was undemocratic and costly? The Government have now created a quango of a quango to operate the South Bank and have doubled the cost of administration alone. Does he agree that costs are escalating, that the South Bank has demanded that they be met, and that the only source of funding is the inadequate sum provided to make good the shortfall resulting from abolition of the GLC and the metropolitan counties?

Mr. Luce: The hon. Gentleman is ignoring the point that I have just made. The responsibilities that the South Bank board has taken on are wider than those of the GLC, which cover only three concert halls. The board, therefore, has wider responsibilities. It is determined to involve the private sector and the Government in the longer term. That provides a very good prospect.

Arts Funding

Mr. Freud: asked the Minister for the Arts what is his current estimate of the shortfall in arts funding for

1986–87 in the light of the abolition of the Greater London council and metropolitan counties; and if he will make a statement.

Mr. Luce: There should be no shortfall. I am making £25 million available to the Arts Council for post-abolition funding in 1986–87. It is reasonable that the rest of the GLC and metropolitan counties' spending should be taken up by successor authorities, which will be relieved of substantial precepts.

Mr. Freud: I am grateful for that reply. Does the right hon. Gentleman realise the extent to which uncertainty exacerbates the misery of arts establishments? Will he address his mind to the fate of the Greater London research library, which has been funded by the GLC and has two months of funding to go but still has had no statement about its future?

Mr. Luce: Of course I am aware of the problem of uncertainty, and that was why I tried to make an early announcement about central Government funding to deal with abolition problems. It is now up to successor authorities to play their part, and I am glad that Westminster borough council is setting a lead in that respect. The library is principally a matter for the Department of the Environment. I understand that the London Residuary Body is discussing with the London boroughs proposals for the continuation of a Londonwide service.

Eastern Region Arts Association

Mr. Murphy: asked the Minister for the Arts what is the proposed level of funding for the Eastern region arts association for 1986–87; and what percentage change this represents since 1979.

Mr. Luce: It is for the Arts Council to determine the level of funding for individual regional arts associations. The 1986–87 funding level for Eastern Arts has not yet been announced.

Mr. Murphy: I thank my right hon. Friend for that reply. Does he recognise that since this Government came to power the increase in real terms in the eastern area has been 50 per cent.? Does he agree that that gives the lie to Opposition claims about lack of commitment by this Government to the arts?

Mr. Luce: I can confirm to my hon. Friend that between 1979–80 and 1985–86 there was a real increase of over 50 per cent. in the allocation to Eastern Arts. As my hon. Friend says, that is a real demonstration of the Government's strong commitment to the arts.

Channel Tunnel

The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about the Channel fixed link.
My right hon. Friend the Prime Minister and the President of France, meeting earlier today in Lille, announced the decision of the two Governments to take together the necessary steps to facilitate the construction of a fixed link across the Channel by the Channel Tunnel Group. Copies of the joint statement are being made available in the Vote Office.
We will publish as soon as possible a White Paper that will give the full reasons for this decision. It will also chart the next steps to give effect to that decision, the treaty, the concession agreement and the legislation.
The two Governments were faced with four proposals of outstanding quality which reflect great credit on the firms involved. It is remarkable that such keen competition could develop to provide and finance privately a project of this magnitude. The key factors that led the Government to select the Channel Tunnel Group were as follows.
Eurobridge was eliminated largely on technical grounds. It is an imaginative and forward-looking proposal, but the technical risks make it too speculative for the two Governments to believe that it was likely to be financed and successfully completed.
The choice between Channel Tunnel Group, Channel Expressway and EuroRoute was a more difficult one. They differ widely as to their technical characteristics, their impact on the environment, their effect upon shipping, and their vulnerability to terrorist attack—all factors in the decision. The invitation to promoters made it clear that any fixed link had to be financed, constructed and operated without support from public funds, and without Government guarantees against technical and commercial risks. It is thus for investors ultimately to determine whether a fixed link is built. The Governments had to try to select the scheme which offered the best prospects of attracting investors' support.
Both EuroRoute and Channel Expressway answer the popular desire to drive from one country to the other with the independence and freedom of a drive-through link, but both have large technical risks. CTG's is a well-developed project, relying on well-proven technology and is both less risky and less expensive. It offers a fast and efficient rail shuttle service for road passengers and freight, with very frequent departures and no booking. It presents no problems to maritime traffic in the Channel, and is the least vulnerable to terrorist attack. Its environmental impact can be reduced to an acceptable level. The Government concluded that CTG was the best scheme to go forward to the market.
The Government remain very much aware of the arguments that the public would like a drive-through link. In due course, the conditions may arise when a drive-through link would be viable. We have therefore secured an undertaking from the CTG that it will put forward by the year 2000 a proposal for a drive-through link to be undertaken as soon as its technical feasibility is assured, and economic circumstances and the growth of traffic allow it to be financed without undermining the return on

the original link. At a later stage, the Governments will be free to invite competitive bids for a further link coming into operation not before the year 2020.
I expect the signature of the Anglo-French treaty to take place in February, and the concession agreement between the Governments and the Channel Tunnel Group to be concluded shortly thereafter. The legislation will then be introduced into this House as soon as possible. Construction could begin by summer 1987.
Consultations in Kent have so far focused on the question of which scheme the Government should adopt. We must now concentrate upon making the chosen scheme as acceptable as possible. We will want to minimise the environmental impact, and to consider carefully the employment consequences of this development. We will be sympathetic if problems seem likely to arise in east Kent when the link opens some seven years from now.
We must arrive at satisfactory arrangements with the promoters for the disposal of spoil and on other environmental matters, and we will ensure that the necessary road infrastructure is provided. The White Paper will deal with these questions.
The Channel tunnel is a massive and difficult project. It will be a challenge to our engineers, our technicians and our financial institutions. Equally, I believe that it will be of great benefit to travellers and exporters alike in giving them cheaper, quicker and more reliable access to the continent of Europe.

Mr. Robert Hughes: In opting for the Channel Tunnel Group tender, the Government—against the instincts and prejudices of the Prime Minister—have chosen a fixed link which has the potential of matching Britain's needs for an integrated transport policy. However, in rushing this decision through in such a tight time scale, the Secretary of State has broken his promise to Parliament on 9 December that he would publish a White Paper on the same day as the decision was announced. I suspect that this will not be the last of his broken promises.
A number of questions must be answered. Exactly when will the White Paper be published? Will the Secretary of State fight in the Cabinet to get a debate in Government time before the treaty between Britain and France is signed? The right hon. Gentleman said that the White Paper would refer to the treaty and various other things. Will the right hon. Gentleman therefore answer this question precisely: will he fight in the Cabinet to get a debate in Government time?
Will the right hon. Gentleman confirm that no obstacles will be placed in the way of those most affected by the scheme and that their views will be thoroughly canvassed by the Select Committee? What guarantees can the right hon. Gentleman provide that the British share of construction costs will be spent on British goods and that British labour will be employed on the project? As we know that the French are keen to gain the maximum advantage from this fixed link and to have the maximum investment in SNCF, will the right hon. Gentleman produce an investment plan in conjunction with British Rail so that BR can maximise the opportunities which the link may offer?
Will the right hon. Gentleman do what he can to establish customs clearance facilities in major regional centres in order to encourage the carriage of long-haul freight by British Rail? Will he ensure that the terminal


points from which passengers may travel are spread throughout the regions? Will the right hon. Gentleman guarantee that any public expenditure on infrastructure will he new money and will not be taken out of existing budgets?
Now that the Government have taken the decision, it is their duty to ensure that any benefits are evenly spread throughout the country. The Government have a responsibility to the nation as a whole.

Mr. Ridley: I was not clear whether the hon. Gentleman was in favour of the link. It is curious that we have had such a grudging response to this statement on the day when the Leader of the Opposition has made a speech—I saw the Tape as I came in—calling for a massive programme to reverse the decline in the British economy.
I shall publish a White Paper giving a mass of the information which the hon. Member for Aberdeen, North (Mr. Hughes) has sought and which other hon. Members will seek. The decision was taken only a day or two ago, so it seems right that I should postpone publication until full details of the decision can be included in the White Paper. I hope that the details will be published within a week or two, or shortly thereafter.
The question of a debate is, of course, one for my right hon. Friend the Leader of the House to consider.
The hon. Gentleman asked me to ensure that objectors to the scheme would have an opportunity to put their views. I confirm that they will be able to present their case as petitioners before the Select Committee in this House and in another place, if the Select Committee is prepared to give them status. I shall encourage the Select Committee to be as wide as possible in accepting petitioners.
I can tell the hon. Gentleman-he might even be pleased to hear this—that I believe that a good deal has been done between the British and the French railways, and between those railways and the promotors, which will result in large-scale orders for rolling stock. I am certain that all those who are concerned on the British side will do their utmost to provide as many jobs as they can on this side of the Channel.
We hope to site national customs controls as far as possible next to each other at the entry to the link of each direction of travel so that there will not be duplication or stopping for through passengers, but there still have to be customs and immigration controls.
As to public spending on infrastructure, there will be new money, in the sense that this is a new project. However, whether or not a new link is built, there will still be a need to expand the road system to the channel ports because of the great increase in traffic that is taking place.

Mr. Geoffrey Rippon: As one of my right hon. Friend's predecessors as Secretary of State for Transport who brought similar proposals before the House more than a decade ago, I congratulate him and welcome his conversion to the project. I express my appreciation at the success of his negotiations and promise my wholehearted support to the scheme.

Mr. Ridley: I am grateful to my right hon. and learned Friend for those wise words. In mitigation of what he said about me, I should point out the small difference between his attempt to get his link constructed and mine, which is that on this occasion no taxpayers' money will be involved.

Mr. Stephen Ross: We welcome the decision that has been made today, and we are grateful for the fact that this project has been chosen and not one of the others.
The right hon. Gentleman said of the chosen scheme: "Its environmental impact can be reduced to an acceptable level." Does he agree that that can be done only if British Rail has adequate capital resources to make full use of the whole network, including the midlands, the north and Scotland? I realise that this is not in his hands, but will he try to persuade the Select Committee to hold hearings in Dover and Folkestone. This would be the right way forward, because people would be able to make their views heard.

Mr. Ridley: I am grateful to the hon. Gentleman for the support that he brings on behalf of the Liberal party for the decision that we have made to choose the Channel Tunnel Group. I am sure that that will be as welcome to Liberals throughout east Kent as it is to the Government. I congratulate him on his courageous support for what he knows to be right. Massive investment will be required by British Rail. A conventional-speed train system will need about £290 million, and a high-speed train system about £390 million, and there will be futher investment in the shuttle rail equipment, which will be undertaken by the Channel Tunnel Group. Some large orders from the promotors and the railways are to come for this part of the project. It opens up great new opportunities for extending the railway system right from the north of our country into the farthest corners of Europe. I join the hon. Gentleman in hoping that the Select Committee on the hybrid Bill will be prepared to travel and hear evidence in the affected areas of Kent.

Mr. Peter Rees: Will my right hon. Friend recognise that his statement will not allay the c'eep and legitimate concern in east Kent about the implications of a fixed link? Therefore, will he accept the need for close and continuing consultation with the local interests likely to be affected? Can he give the House any reassurance that there will be a proper and continuing role for the ferries and ports of Dover and Folkestone? Will he reassure the House that any extra economic activity generated by the fixed link will be retained in east Kent and not be drawn to north-west France?

Mr. Ridley: I should like to be as helpful as I can to my right hon. and learned Friend, who has done so much to represent to me the views and fears of his constituents—as has my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) who, as we all know, cannot speak for himself.
My hon. and learned Friend has made clear, as has my right hon. and learned Friend the Member for Dover (Mr. Rees), the views and fears of constituents on the south-east coast of Kent. As a result of their representations I have decided to set up a joint committee consisting of officials, local authority representatives of the area and the promoters. It will be chaired by my hon. Friend the Member for Hampshire, North-West (Mr. Mitchell), the Parliamentary Under-Secretary of State, and it will go into all the points of local concern and difficulty, in the hope of improving the impact of the scheme on both the environment and the economics of the affected areas.
I cannot accurately forecast the effect on the ferries to which my right hon. and learned Friend referred.


However, I believe that there will be a continuing role for them, even after the link has been opened. Dover has some of the longer distance routes, as well as short sea routes. The growth in traffic is expected to be very great, and I am sure that the ferries will have a share of it. I am also certain that many people will prefer to choose one mode of transport rather than another.
When it is opened, I believe that this huge new artery will carry an immense number of passengers as well as a vast amount of trade between the continent and this country and that it will act as a magnet for new economic development and investment. If the planning policies of the local councils are right, there will be great opportunities for additional development in the east Kent area.

Mr. Donald Stewart: Is the right hon. Gentleman aware that some of us view this project as simply the biggest election bribe in history? It is clear that this decision has been arrived at without due consideration of its implications for Scotland and other parts of the United Kingdom and of its effect upon the merchant service. Will the right hon. Gentleman hold up this project until a commission has fully investigated all these aspects?

Mr. Ridley: The link will greatly benefit constituents throughout the country, including those in Scotland. If goods can be sent to the continent more quickly, more cheaply and without the risk of delay, and if people can travel to the continent more quickly, more cheaply and without the risk of delay, that will aid the competitiveness and trade of the whole country. These are not Government funds which could be spent in other directions. A great deal of this money will be international money. A great deal of this capital will go only to projects which are chosen internationally. It will not be possible to direct it elsewhere.

Mr. David Howell: Will my right hon. Friend accept that the Government have made by far the best and most sensible choice by choosing the Channel Tunnel Group's scheme from among the other fixed link options? Will he also accept that this is the only scheme that ensures that a substantial amount of the growth in traffic will still go to the ferry operators? Will he say a word about the plans for streamlining the handling of customs and immigration, in particular the possibility of on-train customs handling, since this would represent an important asset for the project?

Mr. Ridley: I am very grateful to my right hon. Friend. I welcome his support because he, too, studied this matter in depth when he had my responsibilities. He is correct in saying that this choice means that the opportunities for continuing the ferry operations are great indeed, although it is difficult to be specific about the precise amount.
My right hon. Friend asked about customs and immigration. We are working hard on this matter. My hon. Friend the Minister of State, Treasury is still hoping to find ways to improve this service. For many reasons, we shall need both customs and immigration. The reasons include the prevention of disease through plants and animals being carried through the link. Controls will therefore be needed.
I am anxious that a special arrangement should not be provided for the through trains which use the link which

would be competitively disadvantageous for the ferries or for any other forms of transport. To concentrate both the French and the English controls at the point of departure in each direction will mean at least that passengers are stopped only once, and that control acts only once.

Mr. Gordon A. T. Bagier: In making the decision to have a fixed link, I congratulate the right hon. Gentleman on following the guidance of the Select Committee on Transport. I only wish that he had done so on the occasion of the Bill dealing with buses. The courage of the Minister has been mentioned, so I congratulate him on taking the hazardous line of disagreeing with his right hon. Friend the Prime Minister on her reported preference for another scheme. Will the Minister give an undertaking that when the White Paper is published he will make strong representations to his right hon. Friend the Leader of the House to ensure that it is debated and that a decision is taken by the House before the treaty with France is signed?

Mr. Ridley: I am grateful to the hon. Gentleman. The report of the Select Committee on Transport was most helpful. I am pleased that we have been able to agree with it entirely. The hon. Gentleman did a quick and expert job, and the Government are grateful to him.
This has been a rather frustrating time for the press, because its members have been unable to discover what has been happening. Some hon. Members may have seen misleading statements in the press, which, I am happy to say, are untrue. The Government are united in their choice, and we agree with the French as well.
Debates are a matter for my right hon. Friend the Leader of the House, but there will be a Second Reading debate on the hybrid Bill.

Sir Julian Ridsdale: Is my right hon. Friend aware that his optimism about the future of the ferries is not shared by some of the ferry operators? Will he consider the matter carefully, to ensure that this decision has not sounded the death knell for the British merchant marine, which has served this country so well?

Mr. Ridley: Some ferry operators are more pessimistic than I have been this afternoon about the prospects. However, it will be seven or eight years before any link can be opened. During that time we expect a massive growth in traffic to the continent, which will result in extra business for the ferries. The extent of the business that they will retain is hard to predict, but I am not pessimistic about the prospects for my hon. Friend's constituency.

Mrs. Gwyneth Dunwoody: As the transport unions have been especially careful to offer positive co-operation, will the Secretary of State suggest to the chairman of the Channel Tunnel Group that it is unhelpful to give the impression that he would be prepared to use non-union labour on a fixed link?

Mr. Ridley: Far be it from me to make suggestions to the chairman of the Channel Tunnel Group after we have made our decision and accepted the final proposals as modified. However, there may be some disagreement about what the hon. Lady has said. The customers using the link will place great reliance upon the fact that it will not be subject to strikes and interruption. The hon. Lady's question is a strange one. To ask to ensure the possibility of unionised activity and strikes is to sound a warning note of the true face of the Labour party.

Mr. David Crouch: Is my right hon. Friend aware of how bitter the opposition is in east Kent to the proposition? Is he further aware that, although I give the proposition my support on national grounds, I am sorry that I am unable to carry my constituents with me? Will my right hon. Friend offer my constituents and the environmental societies more than a hybrid Bill as a means of registering their complaints? Will he offer them consultation with officers in his Department, so that they will feel that they are being heard and that something is being done about their complaints?

Mr. Ridley: I am fully aware of the feelings in east Kent. My hon. Friend and I have visited the area and discussed the matter with local people. I share my hon. Friend's view that there is still much apprehension. In response to this, we shall undertake a major consultative programme in the area and, in addition, my hon. Friend the Under-Secretary of State will chair a co-ordinating committee of the local authorities, the promoters and the Government as problems arise. The procedures of the hybrid Bill Committee will allow almost anyone who is affected to make representations, not just to the Committee in this House but to the Committee in another place. Those are full and proper arrangements for hearing local objections, and I confirm that the Government and the promoters will do what they can to adapt the scheme to local requirements.

Mr. Bruce Millan: Is the Secretary of State aware that many of us are resolutely opposed to a Channel fixed link, whether this project or any other, for the reason which the right hon. Gentleman acknowledged in answer to a previous question, namely, that this will suck further economic activity into the south-east of England, which is the last place in Britain that needs such stimulus? This is just another project that will widen the north-south divide, and it will be bitterly opposed, especially in Scotland.

Mr. Ridley: My hon. Friends who represent Kent have expressed concern about the effect on Kent, although not in the sense that it will suck jobs from Scotland into Kent. I believe that the link will create some growth in jobs. The orders that will be placed for rolling stock and other manufactures will be of great benefit to the entire country. The fact that Scottish exports will be able to reach the continent more cheaply and more quickly should be recognised as a help to the competitiveness of the right hon. Gentleman's constituents and, therefore, to their advantage.

Sir Hector Monro: Will my right hon. Friend conduct careful consultations about conservation before producing a White Paper? Will he have discussions with the Nature Conservancy Council, which is the Government's adviser, and which wishes to put strong points to him?

Mr. Ridley: We are always keen to take what action we can to assist in improving arrangements for conservation. My hon. Friend will know that geography dictates where the tunnel will come out and where the service area will have to be. It would be difficult to change that now.

Mr. Roland Boyes: Is the Secretary of State aware that I and the majority of my constituents completely oppose the building of the fixed

link? We live in an area of high unemployment, and we cannot understand why the Government can encourage the expenditure of billions of pounds on building a hole in the ground, instead of encouraging such expenditure on building structures above the ground. The construction of new schools, houses and hospitals would reduce unemployment in my area. This project will increase unemployment there.

Mr. Ridley: This is not Government cash which could be used to build schools, hospitals or other structures in the hon. Gentleman's constituency. It is international capital, which will go to projects only where investors believe they can earn a reward. It is far better that that capital should be used to build a Channel link than to build factories on the continent, which might make the competitiveness of the hon. Gentleman's constituents even worse. I repeat that a most useful benefit to the north of England and Scotland will be the fact that goods will be transported more cheaply to their markets. Transport is an important factor in industrial costs, and anything that we can do to reduce transport costs will help industry.

Sir John Wells: Is my right hon. Friend aware of the great opportunities that will be created for new employment in Kent, despite fears of early local unemployment on the ferries and elsewhere? Will he encourage Kent county council and the district authorities to grant planning permission, so that Kent may grow, with great prospects for our people? In north Kent unemployment is as high as it is anywhere in the country.

Mr. Ridley: I agree with my hon. Friend that there is great potential for further development arising from the link. However, such development must depend on the planning policies pursued by district councils. I have been in close touch with the chairman of Kent county council, who came to Lille with me early this morning. We have throughout discussed the problems and opportunities which the link presents. I undertake to keep in close touch with the Kent local authorities to ensure that every opportunity is taken to help.

Mr. John Cartwright: Given the considerable public interest in having a drive-through link in addition to the rail tunnel, does the Secretary of State accept that the year 2000 seems a long way off? What steps will he take to encourage the CTG to tackle the technical problems involved well before that deadline, and how firmly committed are the French Government to the concept of a drive-through link at a future date?

Mr. Ridley: Both Governments would have liked to see a drive-through link, but the problems are fairly formidable, in the sense of a 5 or 6-kilometre stretch near the French coast where the strata are difficult and unknown. It will be of great assistance to drive the bored tunnels of the CTG through those strata, whet more information about the possibility of a bigger tunnel for a drive-through link can be gathered. There was always doubt about the ventilation system proposed by Channel Expressway. With further advances in that technology, and with the greater geological information that we hope to obtain, it may be possible to drive a bigger tunnel through at a later stage. The CTG's undertaking, which will be spelt out and put into the White Paper, makes it possible to do that fairly soon, or, in default of that, for a further invitation to be made to promoters so that a drive-through link would come into existence by the year 2,020.

Several Hon. Members: rose—

Mr. Speaker: Order. We must bear in mind that we have an important debate after this. I know that this is an important matter, but many hon. Members who are now rising also wish to take part in the subsequent debate. Therefore, I shall allow questions to continue for a further 15 minutes. However, I ask for brief questions, because that will probably lead to briefer answers.

Mr. Jonathan Aitken: As a noninterventionist Minister, can my right hon. Friend explain why all his busy intervening in the past few days has not achieved the winner for which he and the Government were pressing last week, and instead has resulted in what many hon. Members see as game, set and match to the French? Moreover, in view of the widespread misgivings in all parts of the House about the project does he understand that his Bill now faces a grim uphill struggle through the House, and that Parliament will do the job which, because of the timetable, the Government have not yet been able to do, which is to scrutinise the project thoroughly and defend Britain's and the public interest?

Mr. Ridley: I assure my hon. Friend that negotiations with the French were at times quite hard. We achieved what we wanted on a number of matters, particularly in the area of railway finances and railway deals, and in respect of the many matters which will be the subject of the treaty and the concession agreement. I can further assure him that everything that he has read in the newspapers is not accurate; that, although we finally agree, there was a good deal of argument with the French, and that the British Cabinet has achieved its preferred objective, which is the Channel Tunnel Group scheme.
Regarding the time scale, it will take more than a year for the hybrid Bill to pass through both Houses of Parliament, and it will be possible to carry it over at the end of the Session, so ample time will be available. It will be up to hon. Members who sit on the Select Committee, and noble Lords, to ensure that all these matters are fully considered and explored in depth. That is the right time to carry out such an in-depth exploration, because we could not possibly have done that with three or four schemes.

Mr. James Lamond: If this project, which the Minister has welcomed so enthusiastically today, is to bring fresh employment and renew our economy, it no doubt had a high priority on the list before any prudent Government. Now that the Government's responsibility for financing the project has been taken over by private captial—we hope entirely—may we assume that that has freed a considerable sum which can be used to finance projects in regions which are at present hard hit, for example the through-Manchester rail link, or even the retention of the Oldham-Rochdale rail link?

Mr. Ridley: The hon. Gentleman makes a mistake which is typical of the Socialist party, in that he does not understand the difference between Government money and other people's money.

Mr. Keith Speed: Will my right hon. Friend be as forthcoming as possible about the independent advice that he has received, and in particular give us maximum information about the environmental impact study, which is extremely important to Kent?

Mr. Ridley: The environmental impact study will be published with the White Paper. I agree that it is extremely important, and we want to give the maximum amount of information we can, together with the other matters dealt with in the White Paper.

Mr. Andrew Faulds: What on earth has possessed the Government to recommend that this expensive, unnecessary and vulnerable project should go ahead, except as a stunt for electoral considerations on both sides of the Channel, without even a public inquiry into the profound environmental effects and the damaging implications for the regions?

Mr. Ridley: The Government have been persuaded to go ahead because there appears to be a strong desire for better communication links with the continent. It would be a foolish Government who sought to frustrate that when the link does not cost any public money. For a whole day on a motion from the Opposition Front Bench the House debated whether there should be a public inquiry, and it decisively rejected the idea, in my opinion, rightly.

Mr. Roger Gale: I am thankful for the fact that a scheme has been chosen which will have the least short-term bad effect on north-east Kent, and I am grateful to my right hon. Friend for recognising the need for Thanet to be able to compete on equal terms for cross-Channel traffic. Therefore, I am particularly grateful for his undertaking that, given the consent of Kent county council, he will commence immediately the trunking of Thanet Way. Since his visit to Thanet in December, what further consideration has he given to the communication links between Thanet and the Channel tunnel, so that Thanet and the whole of north-east Kent may benefit, as he suggests, from such a venture?

Mr. Ridley: I am grateful to my hon. Friend for what he says, but both Thanet Way and the other routes to which he referred are in the main local, not national, roads. If Kent county council puts forward any of the schemes for priority treatment, we shall do our best to assist under the TSG allocation, but the council must suggest the priorities. My hon. Friend went so far as to suggest trunking Thanet Way. I promised to look into that, and I cannot yet give him a definite answer.

Mr. Dennis Skinner: Is the Minister aware that this is another example of Common Market madness, and that all the talk about jobs for people making the products needed for the Channel tunnel is similar to what we were told by his right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) when the Tory party was dragging Britain into the Common Market without a vote? Why have the Government come up with this without a mandate from the British people? It is a stab in the back for the north, the midlands, Scotland and Wales, as opposed to the few down in the golden triangle. Why does the Minister not give all the hon. Members who dragged Britain into the Common Market a shovel and let them build the tunnel? We shall never get one then.

Mr. Ridley: It is interesting that the hon. Member for Bolsover (Mr. Skinner) is the first hon. Member to mention the Common Market this afternoon. As far as I am concerned, the agreement is an Anglo-French agreement resulting in an Anglo-French treaty to facilitate Anglo-French trade. The vote on this matter in the House in December seemed to be a good mandate for proceeding.

Mr. Andrew Rowe: Does my right hon. Friend accept that while in the medium and long-term the economy of Kent may benefit from the project, in the short-term places like the Medway towns may find that their already inadequate road systems are grossly overloaded by any additional prosperity coming into the area? Can my right hon. Friend assure the House that he will give sympathetic consideration to proposals to improve the road structure in that area?

Mr. Ridley: During the next eight years there will not only be many people employed in constructing the link, but there will be an increase in ferry traffic. In the next eight years, direct employment will continue to improve. I note what my hon. Friend said about roads, and I have made it clear that the Government will be sympathetic and assist with road programmes in Kent which are affected by any fixed link. As projects come forward, they can be considered by the committee to which I have referred. The Government will do all that they can to assist any untoward effects that the link might have upon transport in Kent.

Mr. Robert C. Brown: Is it not a constitutional outrage that a project of this size and importance should be lumbered on the country following consultation in a Cabinet committee and a Cabinet meeting, when the building of a power station can call for a public inquiry lasting three years or more? Is that not scandalous. The Minister lectures my hon. Friends about Socialists not understanding the difference between public money and other people's money, but he does not seem to understand that the enormous cost of the project will be met out of national resources. I can think of 1,001 better ways of using national resources in my neck of the woods, rather than using them in south-east England.

Mr. Ridley: What is an outrage is to take 10, 20 or sometimes 30 years to make up our minds about major infrastructure projects when other countries can do that in a matter of months. If we are serious about development and jobs, we should of course consider environmental, wildlife and employment aspects, but we ought to be able to do that more quickly than we do. If we really want to see the employment that should arise from the link, we must take action within a reasonable time scale.

Mr. Mark Wolfson: Is my hon. Friend aware that, in principle and specifically, I welcome the historic decision revealed today? I also welcome the rapidity with which the decision was reached. Nevertheless, is my right hon. Friend aware that, while welcoming the commitments that he has given today, the House will continue to press him and succeeding Governments on two points that he has made? I am referring, first, to the consultation arrangements to take into account the real concerns of people throughout Kent; and, secondly, the commitment by the Government and the promoters that the project will not require public money, now or in the future.

Mr. Ridley: I am grateful to my hon. Friend for his comments. It has been suggested that the Government have taken this decision with undue rapidity and that we have been rushed. I assure my hon. Friend that in delivering the decision today, 20 January, as promised, we have not been unduly rushed and that we did not need more time to come to a decision. I agree with my hon. Friend about the importance of consultation with Kent and, as I

have said to several of my hon. Friends, the Government intend to pursue that vigorously. I give a categorical undertaking that, apart from the improvement of road and rail infrastructure, no public funds will be made available for the project.

Mr. Tony Lloyd: The Secretary of State does not want to be aware of how offensive the project will be to everywhere north of Watford, as he did not mention the unemployment consequences there. Can he tell the House specifically how many jobs will be lost in the northern regions of England, in Wales and Scotland? Can he also tell the House whether the moneys that British Rail will spend, will be spent in two regions, in the south-east, and in the rest of the country?

Mr. Ridley: The hon. Gentleman seems to have misunderstood. The vast majority of the investment. both by British Rail, which will be in rolling stock, and by the promoters, which will be in rolling stock for the shuttle service, will provide work for railway workshops and such installations. That work should find its way to many factories in towns and cities in the north of England. It is astonishing that instead of welcoming that the Opposition do not seem even to have understood it.
The hon. Gentleman should withdraw the word "offensive" from his remarks. If providing jobs from the private sector by massive orders of this kind is described as offensive, the hon. Gentleman's claim to be concerned about unemployment in the north is hypocritical

Mr. Teddy Taylor: Why is my right hon. Friend so optimistic about an undersea rail tunnel when the only comparable tunnel in the world, just completed in Japan, has been a total and complete financial disaster? Can he at least assure the House that the prospectus issued to investors will make it abundantly clear that if the money runs out before the tunnel is completed their money will be lost and no Government funds wil be made available to complete the project?

Mr. Ridley: There is a difference between the Channel fixed link and the tunnel in Japan, in that the tunnel under discussion will go from Britain to the continent of Europe, while the tunnel to which my hon. Friend referred goes from Japan to the north island off the coast of Japan, where very few people live. I believe that there are many people living on the continent of Europe. I repeat the assurance that I gave in my previous reply. No public money will be made available to rescue the project if it gets into financial difficulties.

Mr. Max Madden: Does the Secretary of State not understand that a good many people living north of Watford do not see any long-term benefits flowing to them from Maggie's monument? Does he not understand that that results from the fact that the project has been steamrollered through in the interests of a tiny group of people who will make a lot of money? Does he not understand that as the Government have refused a public inquiry, and have failed to give any guarantees about British orders or British jobs, there is no more faith in the project than there is in the Government's position over Westland?

Mr. Ridley: If the hon. Gentleman is correct and a small number of people will make a lot of money from the project, they will make that money out of people coming from the whole of the United Kingdom to use the link,


either to send their goods through by rail or to travel themselves. The money will come from his constituents and from constituents in the north of England and Scotland, who voluntarily and willingly decide to spend money on the link because they believe it to be to their advantage to do so. If the hon. Gentleman does not have the good grace to tell his constituents that the project is something that will benefit them, his constituents will find that out for themselves and his advocacy will thereby be devalued.

Several Hon. Members: rose—

Mr. Speaker: Order, In view of the interest shown, I shall allow an extra five minutes, but only five minutes.

Mr. Robert Adley: Is my right hon. Friend aware that many hon. Members give a wholehearted welcome to his courageous decision today? Will he confirm that the decision that he has announced offers the greatest possible benefit to those carrying freignt across the Channel and offers the greatest possible benefit to the regions of any of the proposed schemes. Therefore, in his discussions with British Rail about investment, will my right hon. Friend give the maximum time possible to the proposition that the more investment British Rail can place in its regional facilities, the more that will benefit the nation?

Mr. Ridley: I am grateful to my hon. Friend for his comments, but I am still waiting to hear whether his cochairman of the all party Channel tunnel group, the hon. Member for West Bromwich, East (Mr. Snape), agrees that this is one of the best decisions that could have been taken and that he entirely supports it, as my hon. Friend the co-chairman of the group has so rightly done. However, answer comes there none.
It will be a massive opportunity for railways on the direct London-Paris link, and there will be opportunities to travel from further afield to the link, to cross the Channel by means of the link and to go further into Europe. The project will open up a new opportunity for the railways, and I hope that they will take it. We have demonstrated that our attitude to railway investment, provided that it is commercial, is not to stint it. I think that the railways will confirm that they have not been held back by a lack of funds and that they will be able to make a worthwhile investment.

Dr. John Marek: Is the Secretary of State aware that there are many of us who believe that he has made the right decision, but who are worried and apprehensive that the eventual benefits to accrue will not find their way to Wales, Scotland and the north of England? Is the right hon. Gentleman aware that the existing track in the south-east of England will not be sufficient to cater for the Channel traffic and the London traffic, and that cross-London links are inadequate? Can he give the House a guarantee that British Rail will be able to do a proper job and provide first-class capacity in the south-east and through London to connect the tunnel to the north of England? Will he assure us that the money will not be made available at the expense of other works that British Rail should be undertaking?

Mr. Ridley: The hon. Gentleman takes a reasonable and sensible attitude to the project, which represents a

major opening of opportunities for railways. There is nothing to stop through trains from travelling to the link from all parts of the country. The necessary connections can be made where they do not currently exist. These developments will be of benefit to the hon. Gentleman's constituents and to others from the north and west of England and from Wales and Scotland. It is not planned to increase the standard of the track that runs from Folkestone to London to enable it to take very high speed trains. Such work would cause major disruption and would inflict immense damage on the environment. We have made it clear that that will not happen.

Mr. James Couchman: I apologise to my right hon. Friend for missing the first few minutes of his statement. I congratulate him on taking a historic decision. I regret that the technical ability to construct a road link is not presently available, but my constituents will welcome the fillip to employment that the project will produce in north-west Kent. However, they will continue to be mindful of the environmental problems that may accrue with the link, especially with the link to the north through the Dartford tunnel, which will have an effect on the whole of north-west Kent.

Mr. Ridley: I am grateful to my hon. Friend, and I note carefully what he has said. I hope that we may keep closely in touch with opinion throughout Kent. I am sure that the promoters will want to do so. We shall do all that we can to help meet any problems that are created by the opening of the link.

Mr. Peter Hardy: The Secretary of State has referred to the potential for railway development. Does he realise that that will go down very well in Rotherham, where the works producing products for the railway and the ring road were planned for closure last week? His remarks will go down very well also in the light of the thousands of jobs that have been lost in railway workshops during the Government's lifetime. Does he accept that the principal difference between France and Britain is that the land in France that will be adjacent to the tunnel is the area of France that is most in need of development, while the area of Britain that will be immediately adjacent to the tunnel is the one that is least in need of development? The link could scarcely be sited further away from our areas of immense and growing unemployment.

Mr. Ridley: I think that the hon. Gentleman says that, fully believing it to be true. Many of my hon. Friends, especially those from north-east Kent, have said that they, too, have high levels of unemployment in their constituencies.

Mr. Hardy: Rubbish.

Mr. Ridley: These levels are often higher than those in constituencies represented by Labour Members. It is right to consider unemployment levels in a non-partisan way. If the construction of the link brings extra jobs to any part of the kingdom, I think that we must all be pleased.

Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that the nervousness of many of us stems from the Government's well-known reluctance to spend hundreds of millions of pounds on essential infrastructure in the cities? It seems that there is a great willingness now to spend many hundreds of millions of pounds on ruining that which already exists, and thereafter to spend on what will be


called restructuring. Will he accept that many of us will take it very much amiss if the moneys that are spent on the link come from the hard-pressed cities, which need the moneys to put right what is wrong already?

Mr. Ridley: My hon. Friend must know that the Government have a responsibility to build roads wherever there is need for them and to improve roads that are overladen. We shall have to improve the roads to the Channel ports, irrespective of whether the link is built, because the amount of traffic using them is increasing quickly. The House will be aware that we have built roads to the east cost and south-coast ports, in Glasgow and in the north-east. Currently, and to a large extent, we are constructing roads on Merseyside and in the north-west. We build roads wherever they are needed. We may have to build roads in slightly different places and rather more quickly because of the opening of the fixed link. However, that does not mean that special favours have been given. I am sure my hon. Friend will acknowledge that it is not possible to draw an analogy between that matter and what may or may not be desirable for the inner cities.

Mr. Peter Snape: Can the Secretary of State assure the House that the White Paper will provide a detailed assessment of the net effect on jobs of the fixed link project? Will it set out the Government's view of the number of jobs that will be won or lost during its construction and during the operation of the tunnel in each of the affected industries, especially the maritime industries, and in the various regions of the United Kingdom that will be concerned? Will he provide assurances to the House and to British Rail that British Rail's external financing limit will not be allowed to put any constraint on BR's investment in the Channel project?
What effect does the right hon. Gentleman expect his decision to have on the supposed and forthcoming closure of the Swindon railway works, and on the compulsory redundancies at the Glasgow railway works? If the project is to bring benefits to the engineering sector of British Rail, there should be reprieves for the works that are threatened with closure.
I move on to environmental considerations and urge the Secretary of State to keep the Cheriton terminal as small as possible, so as to reduce the environmental impact on the south of England.
As for industrial relations, will the right hon. Gentleman tell the chairman of the Channel Tunnel Group that the recruitment of non-union labour is no guarantee of long-term industrial peace, as any sensible manager in industry will be the first to tell him?
Finally, the Secretary of State asked me about my own attitude to the project. I have always supported the idea of a railway fixed link with the Channel. I voted against the previous Labour Government's cancellation of the project in 1975. I should like to know more about the right hon. Gentleman's attitude towards the four schemes that were submitted. It is fairly well known that he denounced all of them as madness. He said what we heard him say this afternoon because he was told to do so by the Prime Minister. Compared with him, the right hon. and learned Gentleman the Secretary of State for Trade and Industry is a model of courage and consistency.

Mr. Ridley: If that was support and a welcome, I have never known a better disguise. I have always voted against Channel tunnels which have had to be financed out of taxpayers' money. We now have a private sector project, and that is a valid difference. I support it, and I have done so since the beginning of the scheme. We shall publish in the White Paper all the information that we can on the job consequences of the link both before and after it opens.
I am grateful to the hon. Gentleman for the confidence that he places in the Government. The bulk of the expenditure on investment by British Rail will take place in about 1989, 1990 and 1991, and I have already approved that investment in principle. It will not be cut by the EFL. The hon. Gentleman's confidence that I shall be presiding over that investment as well as the EFL in 1990 is something that gives me great pleasure. I am always grateful to the hon. Gentleman for the kind and generous way in which he treats me.
As the hon. Gentleman knows, Swindon and Glasgow workshops are maintenance establishments and would not be relevant to the type of new build that will be necessary for the project. Everything possible will be done with the promoters and local authorities to contain the effects of the terminal at Cheriton to the minimum and to that which is most acceptable to the residents.
The hon. Gentleman ended on the same sour note as his hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody). I never knew that they got on so well together in these matters. He insisted that there should be trade union participation in the shuttle train operation. This is a matter for the promoters to decide, and they will doubtless want to make sure that they can provide the maximum of continuity of service. It would be wrong for me or for the hon. Gentleman to invervene in such a matter.

Mr. Faulds: On a point of order, Mr. Speaker. About this North sea bubble, when the right hon. Gentleman refers to the benefits to Anglo-French trade—

Mr. Speaker: Order. I called the hon. Gentleman to put a question to the Secretary of State. It sounds as though he is putting another one.

Mr. Faulds: The terminology is incorrect. When the Minister refers to the advantages to Anglo-French trade, is he being specific about the benefits to England—

Mr. Speaker: Order. A point of order is addressed to me, and the hon. Gentleman is now addressing his comments to the Secretary of State. If the hon. Gentleman will address his point of order to me, I will see what I can do to help him.

Mr. Faulds: Further to the point of order, Mr. Speaker. It is time that we in the House clarified our terminology in describing the whole of this island. In describing the benefits of this scheme as being to England—

Mr. Speaker: Order. The hon. Gentleman is drawing me into country into which I should not be tempted to go.

Westland plc

Mr. D. N. Campbell-Savours: On a point of order. Mr. Speaker. In light of the fact that we have been told that certain documents are not to be made available to the Select Committees on Defence and Trade and Industry, I would like to raise a point of order following upon your ruling in column 1211 of the Official Report of 16 January when, following a point of order raised by my hon. Friend the Member for Middlesbrough (Mr. Bell), in which he referred to quotes from official documents and the need for those documents to be placed
in the Library, you said in your ruling:
I do not think that there was a quotation from a document.
You then went on to say in the same column:
that if Ministers quote from an official document, as opposed to paraphrasing an official document, it is our rule that that official document should be laid.
You did not include letters and memoranda. In column 1212, the Prime Minister, in an intervention, said:
The first thing is, therefore, to check Hansard to see whether what was said was given as a direct quote from the document. That is the first thing that we must find out. What follows from that is a matter for the House, not for me.
In cloumn 1214, the hon. Member for Woking (Mr. Onslow) said:
Since a reading of that column nowhere suggests that my right hon. and learned Friend the Secretary of State for Trade and Industry was quoting from any document other than the notes of his speech, this is not a matter that should detain us any longer."—[Official Report, 16 January 1986; Vol. 89, c. 1211–1214.]
You concurred with that view, Mr. Speaker.
The quotation that was being examined is to be found in column 1167 of 15 January. It reads:
At that meeting, Sir John Cuckney referred to what he described as the Government's preference for a European minority shareholder in Westland. I said that a European minority shareholder was in both the commercial and political interests of the Government."—[Official Report, 15 January 1986; Vol. 89, c. 1167.]
That is a quote by the Secretary of State for Trade and Industry. Parts of that statement are from the official document. They are drawn from a letter, which is precluded under the arrangements as outlined in "Erskine May", but equally from a minute. That minute exists. It is known to Members of the House. I quote from that minute where it meets exactly the words as spoken by the Secretary of State. The words are:
The Government's preference for a European minority shareholder in Westland",
and, secondly,
a European minority shareholder was in both the commercial and political interests of the Government".
Those are direct quotes.
I have consulted my hon. Friends, Mr. Speaker, and during the course of the speech by the right hon. and learned Gentleman the Secretary of State he actually referred to documents which were before him. It was clear that he was quoting. It may be that in the Official Report it was not printed as a quote, but it was a quote. It may be that the Secretary of State for Trade and Industry sought not to represent what he was saying as a quote. but it was a quote.
In so far as it was a quote—

Mr. Speaker: Will the hon. Member come to his point of order, because 33 right hon. and hon. Gentlemen are anxious to get on to the next debate?

Mr. Campbell-Savours: I am sure that the House will bear with me. It is a point of order about a matter of great public controversy.
My point of order is simply to establish whether, in the light of what I said, and in so far as the Minister was not paraphrasing, as you suggested to the House that he might be, in so far as he was quoting directly, you would now intervene, Mr. Speaker, and make a ruling as to whether that document should be laid on the Table, as is required in our manual on procedure? This is referred to specifically on page 433 of "Erskine May", where it says:
A Minister of the Crown may not read or quote from a dispatch or other state paper not before the House unless he is prepared to lay it upon the Table. Similarly, it has been accepted that a document which has been cited by a Minister ought to be laid upon the Table of the House, if it can be done without injury to the public interests. A Minister who summarises a correspondence"—
which was not being done in this case; it was being referred to specifically—
but does not actually quote from it, is not bound to lay it upon the Table. The rule for the laying of cited documents does not apply to private letters or memoranda.
We are referring here to a minute, Mr. Speaker, and I put it to you that you might care, following the fullest consideration, to rule.

Mr. Douglas Hogg: Further to that point of order, Mr. Speaker. In the end, it is a matter of interpretation. Is it not right that during the debate to which the hon. Member referred no one from the Labour Benches rose to assert that a direct quotation was being made by the right hon. and learned Gentleman?

Mr. Campbell-Savours: I did.

Mr. Tony Marlow: Further to that point of order, Mr. Speaker. If a Minister makes a short statement of Government policy, obviously, from time to time and coincidentally, that statement can be found in confidential documents. What the hon. Gentleman is saying is that every document, every secure, confidential Cabinet document should be placed before the House. That is manifest nonsense.

Mr. Dennis Skinner: Further to that point of order, Mr. Speaker. You heard what the hon. Member for Grantham (Mr. Hogg) had to say about no one from the Labour Benches rising to challenge the Secretary of State at the time that he was reading from those documents. That statement is not correct because, at the time that the Secretary of State was making that statement, there were several of us—and I was sitting about four places below—shouting from our seats and standing up, calling to the Secretary of State that he was reading. My hon. Friend the Member for Workington (Mr. Campbell-Savours) was also on his feet, making the same point. "Lay it on the Table" is what we were saying. I think that it would be sensible, Mr. Speaker, for you as Speaker to look into the request made by my hon. Friend so that we can make absolutely sure that the matter is dealt with properly.

Mr. Alan Williams: Further to that point of order, Mr. Speaker. The panic on the Government Benches certainly seems to justify the question that my hon. Friend the Member for Workington (Mr. Campbell-Savours) has raised. It has been referred to previously in the House, and several Members have asserted that they actually saw the Minister reading from a document.


Clearly, we do not want to prejudge the issue. Can we ask you, Sir, to ask for sight of that document and to look at it in that light? If not, Sir, you will have to tell us how we judge whether something is a quote. If a Minister happens to bring a document, as is suggested, to the Dispatch Box, reads a piece of it and does not submit it to Hansard when he gives his speech notes, as is normal, this is a way of evading the controls that "Erskine May" envisaged. I ask you to take this away, not to give a judgment immediately, but to come back and give us a ruling on whether it was a quotation.

Mr. Speaker: Order. The Chair must interpret the rules and the rules, as set out in "Erskine May", have been fairly and fully quoted by the hon. Member for Workington (Mr. Campbell-Savours). If the Minister was quoting from a document, it is his duty to lay it. I shall look at Hansard, but I have no means of interpreting what was in the Minister's mind and whether he was or was not quoting. That is a matter for him. I am concerned only about the rules of the House and I shall faithfully follow them.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Importation of Live Fish of the Salmon Family Order 1986 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Maude.]

Rate Support Grant (England)

Mr. Speaker: I must tell the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that I am not able to select his amendments.

The Secretary of State for the Environment (Mr. Kenneth Baker): I beg to move,
That the Rate Support Grant Report (England) 1986–87 (House of Commons Paper No. 140), which was laid before this House on 18th December, be approved.
This afternoon we shall be considering the three rate support grant reports which I laid before the House on 18 December. Before I describe them in detail, I should like briefly to remind the House of where we stand on local authority spending.
This year local authority current spending amounts to about a quarter of all public spending and it is for that reason that the Government seek to influence it.

Mr. Speaker: Order. I did not hear the Secretary of State say whether he was taking the three reports together.

Mr. Baker: Yes, I would ask for the House to take them all together. The other two motions are:
That the Rate Support Grant Supplementary Report (England) (No. 2) 1985–86 (House of Commons Paper No. 587), which was laid before this House on 18th December, be approved.
That the Rate Support Grant Supplementary Report (England) (No. 3) 1984–85 (House of Commons Paper No. 138), which was laid before this House on 18th December, be approved.

Mr. Speaker: It seems that the right hon. Gentleman has the leave of the House to do so.

Mr. Baker: Thank you, Mr. Speaker. We do riot want three debates like this.
Current spending by local authorities for which they get grant has grown by about 4·5 per cent. in real terms since 1981. This means that local authority spending is growing at about 1 per cent. a year above the rate of inflation, despite all our efforts to encourage restraint. We have had some success. In the present financial year there has been no real increase at all. This is an improvement on the 1960s and the 1970s when councils were spending at about 5 per cent. more in real terms each year than the rate of inflation. That was when Tony Crosland went to Manchester city hall and made his famous speech about the party being over. But the party did continue in full swing and it was not until 1979 that one began to see a significant downturn.
I am sure that all my right hon. and hon. Friends will agree that we should continue our policy of expenditure constraint. But I do accept how strongly some shire counties have felt that they have more than played their part, and some indeed have. I must tell the House that on average since 1978–79 shire counties have increased spending by nearly 5 per cent. in real terms and only seven counties have cut their current spending over this period.
Having said that, in no way do I want to denigrate the work that the shires do. They have done much better than many of the high-spending Labour-controlled authorities. Indeed, so great has been the extravagance of those that we have had to introduce rate capping to curb their expenditure. The sort of levels of expenditure that one has been seeing among those authorities is: Wolverhampton, up 8 per cent. in real terms since 1979; Kirklees up 11 per cent.; Sheffield up 14 per cent.; and Hackney, at the top of this unenviable league, up 46 per cent. We have had to


introduce rate capping to restrain the expenditure of Hackney and many other central London high-spending Labour authorities.

Mr. Tony Banks: Will the right hon. Gentleman give way?

Mr. Baker: Not just yet.

Sir Peter Hordern: Would my right hon. Friend care to make an amendment to the public expenditure White Paper which has just been published and which shows that, so far from the increase in expenditure for the shire counties being 5 per cent., as he mentioned, the figure appears to be 1·5 per cent., 9 per cent. for metropolitan areas and 13 per cent. in London? Disregarding that point, will he now make an exception for those shire counties that have consistently spent less than their grant-related expenditure and allow them at least the progression that has been accorded to them in each of the past two years?

Mr. Baker: May I answer that point, which is known as the GREA exemption proposition, in a moment, when I have cleared up the other two reports? I agree that that is central to the point and I am aware that many of my hon. Friends feel that local authorities should be allowed to spend up to GREA without loss of grant.
First, may I deal with the two subordinate reports before dealing with 1986–87? The first is the third supplementary report for last year, 1984–85. That adjusts block grant for 1984–85 in the light of the latest information about authorities' expenditure. The other report is the second supplementary report for the current year, which takes account of late budget data received after the first report which was laid last July. The very fact that, in these two subordinate reports of the reports relating to this year and last year, the grants of local authorities are being changed as the year is progressing, or in the case of last year, when the year is over, shows how deeply unsatisfactory the system is. No treasurer either this year or last year has been able to know the exact amount of grant that his authority is likely to get.—[interruption.] I shall be bringing forward proposals in the Green Paper next week which will change that.
Let me make a technical point which is important because two local authorities—one has just sent me a telex which I received on coming into the House—have submitted revised budget information for 1985–86, too late to be taken into account for this report. I shall, of course, be making further supplementary reports in the current year so that the authorities need be in no doubt that their revised spending will be reflected in their final grant entitlements for the current year. However, the figures in the second supplementary report have been used as the basis for caps and nets on grant changes in the 1986–87 report. I do not at present propose to redetermine the caps and nets in the light of late information about spending in 1985–86.
The main issue before us is the report for 1986–87.

Mr. Tony Banks: rose—

Mr. Baker: I want to deal with this and then reply to the point raised by my hon. Friend the Member for Horsham (Sir P. Hordern).
The first point I want to make, Mr. Speaker, is that the amount of grant which the Exchequer, and that means the taxpayer, will pay to local authorities next year is £11·8 billion. This is the same figure as we announced a year ago for the current year. It is, however, about £400 million more than we actually expect to pay out this year because of penalty holdback and I want to come to that later in my speech as it is of material concern. This means that next year the Exchequer will be funding about 46½ per cent. of local spending. Local authorities have known this since my predecessor's announcement in July. Also in July my right hon. Friend announced that we were providing for £22¼ billion of local authority spending next year. This is nearly £1 billion more than was provided for the current year.
Those are substantial increases and at the time the local authority associations protested. They wanted on top of that a further £1¼ billion. But the Government could not agree to that substantial increase and I do recognise—this is at the core of many of the problems affecting the shire counties represented by my hon. Friends—that the figure announced last July does imply real term cuts in this year's budgets.

Mr. Anthony Beaumont-Dark: Will my right hon. Friend give way?

Mr. Baker: No. I want to come to the point made by my hon. Friend the Member for Horsham.

Mr. Beaumont-Dark: What about the fall in the Exchequer grant from 61 per cent. to 46 per cent.?

Mr. Baker: My hon. Friend asks in parenthesis about the fall in the Exchequer grant from 61 per cent. to 46 per cent. We have made it clear that we have followed that policy because we have wanted to reduce the Exchequer support to local government in an attempt to improve local accountability. My hon. Friend has a distinguished career in local government and we are agreed that local government in Britain would be much enhanced, without a shadow of doubt, if one could improve local accountability and reduce controls from the centre.
I come now to the comments of my hon. Friend the Member for Horsham about the GREA exemption. I remind the House that local authorities knew when my predecessor made those announcements in the summer that the Government were not prepared to underwrite expenditure of that level. I am sorry to say that many local authorities appear to be ignoring the advice about budgeting which my predecessor issued and largely as a result of that they are now facing substantial rate increases.
I must say in defence of the Government's policy that we should not be blamed for that. Take, for example, wage settlements. I have seen several delegations in the past fortnight with county treasurers, county councillors, district councillors and their Members of Parliament. So have many of my ministerial colleagues. Many of the delegations have said that it was all very well for the Government, in the summer of 1985, to say that we were only prepared to fund a 3·5 per cent. increase in expenditure but many of them are having to bear high wage bills this year of 7 or 8 per cent. I have had to say to them that when, for example, the negotiators who were discussing the manual workers' wage claim just before Christmas in October and November said that they would offer 8·2 per cent., I said to the negotiators—which is a


mixed team from all parties—that if the offer was made and settled they should not come to me at the end of the day and ask central Government to make up the difference between 3·5 per cent. and 8·2 per cent. If local government agrees to an inflationary wage settlement of 8·2 per cent. it must be up to local government to pick up the difference. In reply to that they said that it would not be an inflationary wage settlement. They said they would make offsets and savings. I thought that that was callous because, in effect, they were saying that they would lay people off and their wage bill at the end of the day would be no more than the 3·5 per cent. suggested by the Government although they would actually be paying 8·2 per cent. I have had to say to the treasurers and the various delegations that I have seen during the week that if they are building wage settlements of that level into their budget forecasts the Government will never find that extra amount.

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I am anxious to hear every word of the speech and I would be grateful if the right hon. Gentleman would address the Chair more directly and not turn his back on it.

Mr. Clive Soley: He is worried about his back.

Dr. John Cunningham: I am grateful to the Secretary of State for allowing me to intervene, particularly as my question is on the matter of wage settlements. Is it not the case that the report before the House does not enable local authorities to receive sufficient money even to accommodate the wage offer that has been made to teachers, which the Secretary of State for Education and Science has approved? If there is an even higher supplement, does that not mean that the gap between what the local authorities can pay and what the Government are offering will be even larger?

Mr. Baker: I have a comment, which I was going to make later, but I shall make it now if the hon. Gentleman wishes to know the exact position on teachers' salaries.
Some more grant will be available next year for education authorities for lunchtime supervision. I made that point to several of the delegations that I saw. I notice that some of them had anticipated that and some had not. In addition, if the local authority employers can negotiate a satisfactory agreement with teachers on duties and salary structures, we would make block grant available to help finance another £150 million worth of expenditure in 1986–87 on teachers' pay in England. Clearly, that additional provision would have consequences for education GREAs, which I am sure the hon. Member for Copeland (Dr. Cunningham) appreciates. Our present thinking is that the education GREA totals would be increased by the £150 million rise in provision in 1986–87. With an overall percentage of grant of 46·4 per cent., that would attract an additional £70 million to education authorities in grant, not at the expense of non-education authorities. That depends on my right hon. Friend's conditions about agreement on duties and salary structures being met. The longer such agreement is delayed, the more difficult it will be to make the necessary adjustments in local government finance in 1986–87.

Mr. Douglas Hogg: I understand the answer that my right hon. Friend has just given. He does

not fully deal with the main point that the current offer of around 6·9 per cent. has to be financed out of a settlement that implies a decrease in spending of 3·5 per cent. I do not see how that can be done. It seems to me that the basic assumption that the increase in local government spending will be 3·5 per cent. is simply unrealistic.

Mr. Baker: My right hon. Friend the Secretary of State for Education and Science has made clear in the various negotiations on wage settlements for the current year that there is no extra money on the table. In my talks with delegations, treasurers have told me that they have taken this into account in their forecasts. I hope that what I have just said suggests that there is a possibility that they will have a further flow of grant in the next year, 1986–87, to meet the extra wage costs.
The most important feature of the settlement next year is that we have got rid of targets. That decision has been commended by the Public Accounts Committee in its valuable report published last week. I believe that Members on both sides of the House welcome the abandonment of targets and penalties. I was repeatedly pressed by all authorities, not just the shire counties, to do that. However, I accept that some authorities are disappointed that we have retained strong pressures for restraining expenditure through the new slope schedule that we have introduced. Some of my hon. Friends have made that point to me.
Those slopes mean that as authorities spend more they get less grant. Even those authorities spending below GREA, which is the point of my hon. Friend the Member for Horsham, will lose grant if they increase their spending. The possibility of granting what is called the GREA exemption was put to me earlier in the debate. That would mean allowing authorities to spend up to GREA without incurring any further penalties. I asked my officials to calculate the increase in public expenditure if that were extended to all authorities spending below GREA. I have been told that the increase in public expenditure would be an additional £1·1 billion. If that exemption were granted, they would certainly spend up to GREA. I say to my hon. Friend the Member for Horsham that I understand the case he is making for West Sussex.

Sir David Price: (rose)—

Mr. Baker: Please allow me to deal with one matter at a time.
My hon. Friend the Member for Horsham is quite right to say that West Sussex is the lowest spending of all the shire counties. If there is to be a GREA exemption the national consequences for all authorities would be an extra increase in public expenditure of £1·1 billion. I can think of few Conservative Members who have been so resolute in supporting the Government's overall economic strategy that is based upon the containment of public expenditure.

Sir David Price: What is the point of GREA in the circumstances explained by my right hon. Friend? Why have it at all? I thought that it was expenditure up to statutory responsibility as determined by the Department.

Mr. Baker: The GRE assessment of needs is not a target in that sense. The authorities below GREA are better off on the new system than on the old system of targets and penalties. The loss that West Sussex would suffer for every extra pound that it spent above target this year would be £3.10. However, under the new slope it will sacrifice only


74p. That means that it can move towards GREA with considerably less penalty loss of grant next year than in 1985–86.

Sir Peter Hordern: With the greatest respect, that is not the case. Under the old target and penalty regime West Sussex, being the objective low spender, was allowed the largest increase of any authority below GREA. The proportion was an increase of 4·625 per cent. before any penalty was attached. It could at least be argued that that was higher than any authority received, and that those authorities which spend, and continue to spend, well above GREA were not allowed to spend even a small proportion. How can it be argued that it is a good thing to do away with the target and penalty system when the result of that abandonment, as my right hon. Friend has explained to the House, makes it much worse for the county of West Sussex than it was before?

Mr. Baker: I may not have explained the point clearly. The new system undoubtedly places authorities such as my hon. Friend's in a better position than the target and penalty system. It does so for three reasons. First, low spenders, which is what West Sussex is, would receive more grant at their present level of spending than they would have received if we had not scrapped the targets and steepened the slopes. Secondly, they receive more grant for spending at GREA than they would have done. Thirdly, they have a much reduced rate of grant loss if they reduce spending from present levels. I should be happy to set out that point to the treasurer of West Sussex county council and to my hon. Friend.

Dr. Oonagh McDonald: I thank the right hon. Gentleman for giving way, because I represent part of a shire county. Of course, it is a lower spender than I should like. [Interruption.] It is. It does not provide a proper level of services. If it were to spend enough to meet the standard services that the Government require, the rates would have to go up and the level of grant would be reduced. How does he explain that absurd position?

Mr. Baker: The answer lies in the reply that I gave to my hon. Friend the Member for Horsham. Under targets and penalties there is no doubt that the authorities in those areas that the hon. Lady and my hon. Friend represent would be much worse off. I am afraid that that is how the system works and has worked. That is why we have abandoned it.
At the centre of the debate lie the estimates of expenditure for next year that have been made by various shire counties and all district councils and metropolitan authorities. Local authorities are estimating what their budgets will be. I received a delegation from Buckinghamshire last week. The meeting was attended by my right hon. Friend the Member for Chesham and Amersham (Sir. I. Gilmour). I shall give my recollection of the meeting. If it does not accord—[Interruption.]
When I asked the chairman of Buckinghamshire county council what its budgeted increase in expenditure was for next year, he said that it was 12 per cent. He set out the reasons why he was budgeting for an increase of 12 per cent. I told the chairman—I believe that my right hon. Friend will agree—that in no way could the Government be expected to finance that degree of

overspending. It is well above the rate of inflation and the level announced by my predecessor in July. I said that it was pointless for authorities to come to me and say, "Please fund that level of spending with central Government grant." The chairman wrote to me after the meeting and said:
The presentation I made and the notes I have left you with did, I trust, bring out the essential financial problems facing the County Council, but I should like to re-emphasise that the exercise to examine our projected expenditure level next year is still at an early stage and depends on decisions not yet made about the extent of budget reductions the County Council may choose to impose.
The point that I want to make is that all local authorities are now making up their budgets. They are, to some extent, negotiating not just with the various members of their councils, but with central Government. It is clear that Buckinghamshire's estimate was a preliminary one. If there were to be an increase of 12 per cent., there would be a substantial rate increase. The chairman has gone away and is to examine with his committee chairmen whether they can make any savings. I expect that they will be able to make savings.

Sir Ian Gilmour: I do not dispute in any way my right hon. Friend's recollection of that meeting. The county council chairman has now written a second letter to him, which I believe I am at liberty to quote. He points out how the 12 per cent. was arrived at. He reiterates his points, but says that he is still going to look for economies. He shows that what he said about the 12 per cent. was nothing like as tentative as my right hon. Friend has inadvertently suggested.

Mr. Baker: It is a strange parallel. I received the letter literally as I came into the Chamber. In the penultimate paragraph of the second letter, the chairman says:
However, I must continue to stress that the County Council is actively seeking ways to reduce its expenditure in 1986–87 both by real terms reductions and further management efficiencies." I applaud him for doing that.

Mrs. Elaine Kellett-Bowman: rose—

Mr. Baker: If I may continue—

Mrs. Kellett-Bowman: My right hon. Friend referred to the fact that local authorities are now making up their budgets. Would he care to contrast the negative view taken by the Lancashire county council, which has been profligate over the past four years and has increased rates massively, with its excellently conducted, but Conservative-controlled, city council which has not raised rates at all over the past four years but which may have to make a small increase this year?

Mr. Baker: I am glad that I gave way to my hon. Friend. She has shown that some authorities continue their high-spending habits. Lancashire county council is one of them. Another group of councils that is substantially increasing expenditure consists of those councils that have no overall control. Those that have no overall control, which are the nirvana of coalition politics, seem to be in agreement on only one thing—spend more. Hung councils mean high-spending councils; high-spending councils mean high rates.

Mr. Stephen Ross: rose—

Mr. Baker: May I move on, please?

Mr. Ross: The right hon. Gentleman must be fair to this Bench.

Mr. Baker: May I move on and say—

Mr. Ross: The right hon. Gentleman is dodging the issue.

Mr. Baker: —that, having sought to make the points that I have, I none the less accept that it has been said to me repeatedly during the past few weeks that shire authorities have suffered a disproportionate loss of grant.

Mr. Michael Grylls: rose—

Mr. Baker: May I get just a little further on before I give way again?
One of the foundation stones of the rate support grant system is called resources equalisation. That is why something like £1 billion each year is transferred through the grant system away from London and the south-east to the rest of the country. Few people appreciate how the grant system works—[Interruption.]—as a major redistributive element. That is one of the fundamental—

Mr. Robin Maxwell-Hyslop: Defects.

Mr. Baker: I agree with my hon. Friend that it may be a defect. But it has been in the system for a long time. It means that when the available block grant is reduced, all authorities lose a common rate poundage of grant but that loss is greater in cash for the higher rateable value authorities such as the home counties. This principle of resource equalisation is reputed to have been inspired by the late Sir Winston Churchill when Chancellor of the Exchequer, the late John Maynard Keynes and the very much alive Earl of Stockton. Some of my hon. Friends, though not all, would consider that an impeccable pedigree.
In answer to the intervention of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), I should say that the Green Paper on local government finance, which I shall bring out next week, will raise the issue of resource equalisation. In the period of consultation which will be available, Members and outside interests will be able to comment upon this. It is central to the grant system. I want to consider whether it should continue at its present level or at a lower level as a less significant feature of the new arrangements. It is a fundamental and important part of any change in the grant system and accounts for some of the loss of grant this year to the home counties.

Mr. Tony Banks: rose—

Mr. Grylls: Will my right hon. Friend give way?

Mr. Baker: May I press on?

Mr. Grylls: My right hon. Friend, as a Surrey Member, will know that there is a feeling of outrage in Surrey. Surrey has lost £22 million in grant this year, yet it is the second lowest spender after East Sussex. People cannot understand that. Will my right hon. Friend look at that aspect and seek a fairer distribution? We are asking not for more public expenditure, but for a fairer distribution and no penalties for economic and efficient local government.

Mr. Baker: Like me, my hon. Friend the Member for Surrey, North-West (Mr. Grylls) represents a Surrey constituency. I saw the Surrey delegation with the treasurer last week. Surrey is budgeting for an increase of 5·7 per cent. That is one of the lowest in the range of expenditure increases.

Mr. Simon Hughes: But a rate increase.

Mr. Baker: I think that the rate increase in Surrey will be significantly less than 20 per cent. However, there are several other factors still to be taken into account, some of which I shall come to in a moment.

Mr. Tony Banks: Will the Minister give way?

Mr. Stephen Ross: Will the Minister give way?

Mr. Baker: I will take one intervention.

Mr. Ross: Does the Secretary of State agree that the GREA methodology has been reduced this year? If the Isle of Wight spends the GREA, it will still have a rate increase of 16 per cent. The island has had the worst settlement of all, except for Bedfordshire. Will the Minister listen to our pleas? The Isle of Wight is under Liberal control, but it has not overspent.

Mr. Baker: I do not have to hand what the level of budgeted expenditure will be for the Isle of Wight next year. I dare say that that will be a material fact if there is to be a rate increase of that level.
Another feature of this document is the support given to the inner cities. I want to meet this issue head-on. I think that my right hon. Friend the Member for Chesham and Amersham made a speech on this matter just before Christmas. My right hon. Friend and other hon. Friends will agree that the problems of some of our towns and cities are acute. High levels of social deprivation, large numbers of single-parent families, pockets of poverty, pockets of unemployment as high as 50 per cent. and the problems of large ethnic minorities require extra resources. I have thought it right to recognise that. No Secretary of State can walk by on the other side when faced with those problems.
Some say that, while they recognise the needs of the towns and cities, those needs should be met from resources other than through the rating system. But if more resources are to be found, they have to be found either from the ratepayer or the taxpayer. At the end of the day the resources cannot come from anywhere else. As my hon. Friend the Member for Surrey, North-West has pointed out, my own constituency is making a contribution to that shift this year, and I steadfastly defend that policy.

Dr. Keith Hampson: I am sure that my right hon. Friend the Minister will agree that not all his right hon. and hon. Friends come from the shire counties. Will my right hon. Friend look again at the GREA formula? I am the only person here from any party representing Leeds, which has a deprived inner-city area, acute ethnic problems and the largest percentage of defective housing in the country. How is it that the formula has given us fewer resources this year than last year?

Mr. Baker: I shall certainly look at the GREAs. Some have suggested that I should not look at GREAs and that they should remain the same, but I believe that it is necessary to do so. This year, Leeds has a grant of £111 million and next year Leeds could qualify for a grant of between £123 million and £128 million. I am not familiar with the expenditure pattern, but I will look at what my hon. Friend has said.

Mr. Beaumont-Dark: I do not doubt the sincerity of my right hon. Friend when he says that he wishes to tackle head-on the problems of the inner cities. Why is it that


when he tries to help Birmingham, we always come out as the sufferer? With help like that, Birmingham is not encouraging any enemies. The rate of penalties for Birmingham is 180 per cent. Over the past two or three years Birmingham has spent within the Government guidelines and spent below the wretched GREA principle—which I warned the Government against years ago. Why should Birmingham now be penalised for doing what the Government wanted it to do? It seems not common sense but lunacy.

Mr. Baker: I received a group from Birmingham before I made my statement in December. There was then talk of a rate increase in Birmingham of 60 per cent.

Mr. Beaumont-Dark: They always do.

Mr. Baker: There is an element of negotiation in estimated rate increases. As I understand it, the rate increase will be substantially lower than that this year.
My hon. Friend asks if the Government will do anything about the GREA. The Green Paper makes two specific proposals on grant. One is an infinitely simpler system of grant, and the other is the need for a simpler set of formulae other than GREA. The system has become over-complex, and we are attempting to fine—tune elements of local government expenditure which should not be fine tuned.

Mr. Max Madden: rose—

Mr. Tony Banks: Will the Minister give way?

Mr. Baker: I shall not give way again.

Mr. Banks: The Minister has not given way once.

Mr. Baker: The problem of London and grant recycling will critically affect the level of rates next year. A central issue for all London boroughs, both inner and outer, will be the levy of the London Residuary Body. The chairman issued a proposed budget involving a high proportion of capital items. If that had been the basis of the levy, London rates would have been very high. The chairman has now written to me with a much lower budget of about £60 million.

Mr. Banks: Who leaned on him?

Mr. Baker: The chairman proposes to use capital receipts from mortgage repayments and GLC balances to meet some of the obligations of the London Residuary Body.

Mr. Banks: There will not be any.

Mr. Baker: That seems to me to be a reasonable basis for determining the levy.
In addition, London Members will know that I have been consulting about the basis of how the balances should be distributed—whether on a rateable value basis or on a population basis. I have decided that the balances should be distributed on a population basis.

Mr. Banks: That helps Croydon.

Sir William Clark: I am sure that my right hon. Friend will appreciate that the inner and outer London boroughs are similar to the shires. The outer boroughs have been prudent but are to be penalised. The budget of the London Residuary Body was £170 million,

but my right hon. Friend says that that has been cut to £60 million. Does that mean the elimination of the redundancy payments within that budget? Any redundancy payments due to the abolition of the GLC should not be carried forward, but should be settled by the GLC before it is abolished.

Mr. Baker: The answer to that question is yes, it does exactly that.

Dr. John Cunningham: I am grateful to the Secretary of State for giving way again—he has given way a great deal. Is he saying that the London residuary body will have total freedom to use however much of its capital receipts it thinks fit—in contrast to the rigid controls that the Government have put on the capital receipts of local authorities?

Mr. Baker: As for capital receipts, one of the major items of the Budget was £70 million of mortgage repayments. One of the original proposals was that that should be recycled to the boroughs, but the collective view is that those capital receipts should be used against capital items.

Dr. Cunningham: So the answer is yes.

Mr. Baker: I am not so sure that it is. I shall look carefully at what the hon. Gentleman has said. The main item here is the adjustment of mortgage repayments. I shall now consider grant recycling.
Under the old system of targets and penalties, the grant lost by the high spenders was surrendered to the Treasury. Last year, this holdback amounted to £450 million and this year it is about £430 million. Under the new system, the grant that will be lost by the high spenders will form a pool which will be recycled to local authorities. Therefore, if traditional low spenders can keep their spending right down, and if the high-spending Labour authorities cannot break the habit of a lifetime and spend as usual, substantial amounts of grant will flow back to the low spenders.

Mr. Tony Banks: Will the hon. Gentleman give way?

Mr. Baker: I regret not.
From the picture that is emerging of budgets for next year I have little doubt that there will be significant extra grant available from this source. I cannot estimate the figure precisely, but I have exemplified the effects of a pool of £400 million which is a little less than holdback this year. If such a pool existed, it would be distributed on an equal poundage basis. This would mean that Bedfordshire could get an extra £4·5 million, Buckinghamshire nearly £6 million, Cambridgeshire just over £5 million, Devon nearly £7 million, Dorset £5 million, East Sussex nearly £6 million, Essex £13·5 million, Hampshire over £12 million, Hereford and Worcester over £5 million, Hertfordshire nearly £9·5 million, Kent over £11 million, Norfolk over £5·5 million, Staffordshire over £7 million, Suffolk over £4·5 million, Surrey £9·5 million, Lincolnshire £3·7 million, West Sussex over £6 million and Wiltshire over £3·5 million. I had that exemplification in my Box last night and I think that I had better put it in the Library.

Mr. Paddy Ashdown: Will the right hon. Gentleman give way?

Mr. Baker: No.

Mr. Neil Macfarlane: Will my right hon. Friend give way?

Mr. Baker: I really should finish my speech but I shall give way once more.

Mr. Macfarlane: Might any of the outer London boroughs such as Sutton or Croydon be added to that list?

Mr. Baker: When I put the figures in the Library, my hon. Friend will find that that is the case.

Mr. Ashdown: Will the right hon. Gentleman give way?

Mr. Baker: I hope that the hon. Gentleman will forgive me, but no. I have already given way once to a Liberal, and that is disproportionate to their representation in the House.
I want to stress that I cannot guarantee that this extra grant will be available since it will depend upon the extent of the overspend, but it is quite clear from the meetings that I have had with the treasurers that some are anticipating in their budgets some flowback, because they too have done these calculations. It is a question for them and for their finance committee to judge how much could reasonably be estimated.
I think it right to set out for the House the position on the recycling of grant since this is the first year in which it will operate in this way. During the coming weeks, treasurers and finance committees will want to consider how this is likely to affect their cash position and how in turn it is likely to affect the rates which they will agree.
In a few moments, we shall hear from the Opposition. I hope that the hon. Member for Copeland will set out the Opposition's policy on local government finance. Would he increase grants from the Government next year? If so, by how much? How much would go to the shires? Would he stop rate capping?

Dr. Cunningham: Yes.

Mr. Baker: Has he estimated the cost of ending rate capping? How many hundreds of millions of pounds would it cost? How many millions of pounds would then be thrust to the most extravagant councils in the country? Before he poses as the friend of shire counties, will he spell out what role he sees for them? During the past year, he and the hon. Member for Blackburn (Mr. Straw) have made speeches advocating new regional councils and powerful district councils.

Mr. Tony Banks: Will the right hon. Gentleman give way?

Mr. Baker: Where does that leave the shire counties? What functions will he move away from the shire counties? Social services? Roads? Education? Police? Fire? Will such functions go up to regional councils or down to district councils?

Mr. Banks: Will the right hon. Gentleman give way?

Mr. Baker: I am being asked by several of my right hon. and hon. Friends to try to square the circle between increases in spending well above the rate of inflation and low rate increases, while holding down total local government expenditure and curbing the excesses of the lunatic Left. I make no bones about it—

Mr. John Fraser: Will the Secretary of State give way?

Mr. Baker: No.

Mr. Fraser: I speak for the lunatic Left.

Mr. Baker: If the cap fits, wear it.
I make no bones about the fact that the settlement attempts to keep the lid on rising expenditure while recognising the efforts made by lower-spending authorities. It is well known to the House that I am not enamoured of the system of local government finance——

Mr. Tony Banks: rose—

Mr. Maxwell-Hyslop: Will my right hon. Friend give way?

Mr. Baker: Very well.

Mr. Maxwell-Hyslop: If my right hon. Friend is not enamoured of the rating system of local government finance, why does he increase the proportion of local authorities' income from that system and reduce the proportion from the system of which he presumably is enamoured—central Government taxation?

Mr. Baker: My hon. Friend might not have heard what I said earlier—[HON. MEMBERS: "He did."] I have been asked to square the circle between expenditure that is rising well above the rate of inflation, to secure low rate increases and to contain Government expenditure. The containment of general Government expenditure lies at the heart of the Government's economic policy and that is why I have not been able to agree with the GREA exemption and why the settlement cannot increase grants significantly. However, as a result of recycling, higher-spending authorities will contribute significant grant to lower-spending ones. My hon. Friend's criticisms of the system are well known.

Mr. Tony Banks: rose—

Mr. Baker: Next week I shall bring out a Green Paper which deals with the fundamental question, which is as my hon. Friend said, the constitutional question whether we want more central control or more local accountability. I stand firmly on the side of those who want more local accountability. [HON. MEMBERS: "Come off it."] The House will be able to judge that statement when it sees my Green Paper. Until a new system, which will involve fundamental changes, is in place, I commend this fair settlement to the House.

Mr. Simon Hughes: On a point of order, Mr. Deputy Speaker. The Secretary of State referred to a document containing figures of how much might return to shire counties this year. It is a key element in the debate. The right hon. Gentleman said that he would put it in the Library. Can it be put in the Library within minutes, rather than hours, so that it is available to hon. Members during the remainder of the debate?

Mr. Deputy Speaker: That is a matter for the Secretary of State, not for me.

Dr. John Cunningham: The House is asked today to approve the seventh major rate support grant presented to Parliament by the Conservative Government since they took office. There have been many supplementary reports, and there are two more of those before us today. Entertaining as it might be for the House to discuss Labour party policy on local government, that is not the purpose of the debate. I am happy to say that if the Government will provide a day for such a debate, we will be more than willing to participate.


During the last six years the Government have introduced many major policy changes—major reconstructions of the methods and systems employed to distribute grants to local authorities. They have introduced many more powers for Ministers to employ, scrutinise, control, and direct what councils can and cannot do with their money and with the money that they receive from the Department of the Environment, through this and similar reports. They have been seven hard, difficult and often confusing and frustrating years for many councillors of all political parties, for local government as a whole and, I might add, for some Conservative Members too.
It is interesting to reflect that the report was a matter of such little controversy during the period of office of the last Labour Government that in one year the Conservative Opposition chose not to debate it at all. It went through on the nod. Each year since the Conservative Government came to office there have been significant changes to understand and accommodate, and this report is no exception. Indeed, it introduces some of the most significant changes of all. I shall come to those later.
I must compliment the Secretary of State on at least one thing. In the presentation of his report he employed a certain amount of skill, not to say sleight-of-hand, in trying to deflect what he no doubt thought would be the criticism of his hon. Friends who represent shire counties. I should perhaps remind him that there are people on this side of the House who represent shire county constituencies, not least my hon. Friends and myself. I shall have something to say about that in a moment. Perhaps he felt like a Labour Cabinet Minister in the 1945 to 1950 Government who said, "The Opposition is in front of us and the enemy is behind". I say that because the Minister was certainly under some scrutiny from his hon. Friends. Following his uncertain and unconvincing performance, it will be interesting to see whether they will support the Government in the Lobby tonight.

Mrs. Kellett-Bowman: The hon. Gentleman referred to the swing to London affecting the shire counties.

Dr. Cunningham: I did not refer to that.

Mrs. Kellett-Bowman: The hon. Gentleman was talking about the practice affecting the shire counties. He was referring to representations made at the time of the Labour Government. I have a letter dated 10 January 1978 complaining that Lancashire county council was affected by the basic swing to London and complaining about the position as it applied to shire counties generally. That was when Lancashire started to suffer.

Dr. Cunningham: Lancashire county council, or any other county council, Tory or Labour-controlled, would give its eye teeth to have the 60-odd per cent. rate support grant that it was getting in those days compared to the 46 per cent. grant offered in this report. It is a massive tribute to the strength, stability and confidence of local government, and to local democracy, that in the main it is able to respond to this panoply of Government changes positively, vigorously and with considerable ingenuity to maintain services and employment, to provide efficient management and, perhaps above all, to retain the understanding of local communities.
Over a six-year period the Conservative Government have consistently pursued a number of basic policy

objectives that are opposed by local government, and they have pursued those policies with mixed results. The original aims of the Government, some of which everyone could and would support, were to protect ratepayers. I almost forbear to remind the House that Government policy was to abolish rates altogether, to reduce Government controls over local government, to reduce central Government financial support to local authorities, to simplify the system, and to reduce local government current expenditure. The Secretary of State had something to say about the growth of local government current expenditure. It is nothing compared to the growth in central Government current expenditure. On a comparable basis, it is probably less than 50 per cent. of it, and I suggest that the right hon. Gentleman and his friends in the Cabinet should address themselves to that much bigger target rather than to local government current expenditure.

Mr. Stephen Ross: Last September the Cabinet had the benefit of a presentation from the Audit Commission, when it was pointed out that the county, borough and city treasurers were much better at estimating public expenditure than were central Government Departments.

Dr. Cunningham: The Audit Commission has recently published a report in which it compliments local government on its competence, on the management of its affairs and on its handling of the precious public resources at its disposal.
From the start of this Government's period of office there have been massive internal conflicts at the centre of local government policy. The strategy was incoherent at the beginning, and it remains so today. The centrepiece of Conservative policy is consistently and systematically to reduce the rate support grant year by year, and that is again proposed for the coming financial year. The grant has fallen from 61 per cent. of council expenditure in 1979–80 to 46 per cent. for the coming year.
In the absence of any other major change of policy towards local government income, this change can have only one result—major rates increases. The conflict, indeed the contradiction, of promises to protect ratepayers is obvious. During the Government's period of office, average rate payments in England and Wales have more than doubled. Comparing 1979–80 with 1985–86, one finds that average rates payments under the Conservative Government have risen from £3·73 per week to £8·27 per week, and the percentage increases have been 27·2, 21, 14·9, 7·2, 6·8, and last year there was an increase of 9·5 per cent. in the domestic rates.
In this Parliament, as in the last Parliament, the Government have simply abandoned their promise to abolish rates. Far from protecting ratepayers, the Government have consistently and deliberately shifted burdens from high income taxpayers to lower income ratepayers, and they continue to do this in the report before the House.
Each year since 1979 the amount of Government cash provided to local authorities through the rate support grant has been cut substantially. In accumulated terms, at 1985–86 prices, the loss to councils amounts to a staggering £16·1 billion. The grant losses have been felt by all local authorities, and the average level of domestic rates has risen far in excess of the rise in inflation. In 1978–79 the average unrebated domestic rate bill was £128. Last year it rose to £345, an increase of 169·5 per


cent., or 82 per cent. in real terms. Between 1979–80 and the last financial year, the overall average increase in local authority current expenditure was 98 per cent. The increase for central Government was much higher, at 106 per cent.
The loss of grant is the biggest single reason why rates have risen so sharply. Without these deliberate cuts, average rates levels would be at least 25 per cent. lower—equivalent to £86 per annum, or almost £1·70 a week, for the average family paying rates. In a press release entitled "Surrey's message to Kenneth Baker",
Surrey county council's policy chairman, Tory Councillor Douglas Robertson, said:
The authority's carefully worked out plans to have a rate increase in single figures have been shattered by loss of grant." The press release stated that
Councillor Robertson asked the Secretary of State to
tell the Chancellor of the Exchequer that rate increases should not be used to reduce taxes and … to look again at the grant formula which year after year has penalised Surrey".
Those words are not from any Labour local authority leader or the leader of a hung council or a council controlled by the Liberals or the SDP; they are from true blue Surrey.
After six years, local government is more rigidly controlled from Whitehall than ever before. Grants are now specifically controlled and, consequently, accountability to local communities has been eroded rather than enhanced—another failure of Government policy, and contrary to what the Secretary of State has told the House is one of his personal objectives for Government policy.
It is not unreasonable for the House to ask the Secretary of State why, after almost seven years in office, the Conservative party has failed to reach most of its policy objectives for local government and why it has simply abandoned others. Are we and the electors and the colleagues of the Secretary of State to be thankful and to console ourselves with the words of Cicero:
Promises are not to be kept if the keeping of them would be harmful to those to whom they have been made"?
That certainly seems true of most promises made by the Secretary of State and his Cabinet colleagues.
The right hon. Member for Mole Valley (Mr. Baker) must have been delighted to reach the Cabinet table finally, but his pleasure must have been shortlived when he realised that, with one bound, he was up to his neck in a bog. We now know that that is how he feels about this matter, because he was candid enough to tell us so during the Tory party conference in October 1985. In an almost Reaganesque one-liner he described the achievements of his Government colleagues after six years in local government finance as
a maze, surrounded by a marsh, shrouded in a fog.
After seven years of consistent Conservative legislation, massive changes and more central control, the trail to the Department of the Environment, which is littered with abandoned election promises, apparently leads to a maelstrom of political doom, a charnel house of political ambitions. We should reflect on the whereabouts of the right hon. Gentleman's predecessors in office, Mick, Tom and Pat—those well-known builders of local government financial systems. One was sacked, one resigned and one fled the country. Typically, while those maze manufacturers, quagmire constructors and fog fabricators have almost disappeared without trace from the local government scene, poor councillors have been left to deal with the bills.
For several years successive Conservative Ministers have promised that, in the end, their policies would benefit low-spending authorities. As the Secretary of State asked me about this, let me make our position clear. We are not sure why such authorities should be helped, because experience shows that often they are the authorities offering a range of low quality or even mean service provision, from education through housing to social services.

Mr. Maxwell-Hyslop: In many cases, local authorities are low spenders because they have such slender financial resources, because their rateable values are low, and the incomes of the people are low. Because their populations are so scattered, the cost of administering is high. That is why they have a policy of low spending.

Dr. Cunningham: That argument will come as a surprise to residents of stockbroker belts in Surrey, Sussex, Hampshire and Kent. I am prepared to accept that that may be true in some parts of the area represented by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). Low spending is not the same as efficiency or good management, any more than high spending can be equated with carelessness with public money, as the Audit Commission continues to demonstrate in successive reports.

Mr. Ashdown: The hon. Gentleman's description of low-spending authorities and inadequate resources—for instance, for education—fits Somerset county council under its previous administration. That council was hounded by Her Majesty's inspectors for inadequately fulfilling its education requirements. Is it not an appalling indictment of what the Secretary of State now proposes that the maintenance of that scandalous neglect of Somerset, which was the hallmark of the previous Tory Administration, will still require a rate increase of 20 per cent.?

Dr. Cunningham: I agree with that. Much the same could be said of the county of Norfolk and many other Tory-dominated counties.

Sir Bernard Braine: I hope that the hon. Gentleman will not leave the House with the impression that lower spending is synonymous with inefficiency. In counties such as Essex—my county—low spending is a product of prudent financial management. It has been praised on the Floor of the House by successive Secretaries of State. I hope that the hon. Gentleman will not pursue that argument.

Dr. Cunningham: It is an argument which I would be more than willing to pursue, but I shall let the right hon. Member for Castle Point (Sir B. Braine) pursue it with my hon. Friend the Member for Thurrock (Dr. McDonald), who also represents an Essex constituency. She put an entirely different point to the Secretary of State.
Systematic reductions in rate support grant cannot ensure better value for money. In any event, councils of all political persuasions are surely entitled to believe that their good management—this is the point, with which I agree, made by the right hon. Member for Castle Point—and their efficiency should benefit their communities and not lead to further loss of grant from central Government. Surely central Government's task should be to reinforce good local authority management, not to undermine it.


This year, the Government's failures are more exposed than ever. It is clear that the Rates Act 1984 has not helped the counties, as was frequently promised it would. It is clear also that money from a smaller pool has been transferred from counties and districts to conurbations in an attempt to cover up the cost to boroughs of the abolition of the metropolitan counties and the GLC. Government policies have seriously damaged the county councils' share of RSG, as we always said they would. Anger and dismay in the Association of County Councils is widespread and deep, so much so that the association has written to all hon. Members asking for this report to be rejected by the House—an unprecedented move by that local authority association.
Last year's county council elections saw the Conservative party humiliated in its heartland. Now, even the last bastions of Toryism are saying enough is enough—Surrey, Suffolk, Norfolk and others. Captain Robert Sheepshanks, Tory chairman of the East Anglian Consultative Committee on Local Government, said:
There is considerable frustration in East Anglia—the settlement will lead to a very high rate increase across the region.

Mr. Soley: He is being fleeced.

Dr. Cunningham: He is indeed.
In this report, the Government have imposed on shire counties the largest year-on-year cut ever imposed on any class of authority since the block grant system was introduced. This is a measure of the change that is being imposed on the counties.
In addition, there have been large grant losses for county councils because of the impact of new grant-related expenditure assessment. How can Conservative Members from counties vote for this report? It represents a massive kick in the teeth for rural communities, which in many cases—as in my constituency, the borough of Copeland and Cumbria county council—are massively disadvantaged. People in rural boroughs and districts are thus hit, not once, but twice by the proposals. It comes as no surprise that the Association of County Councils is forecasting rate increases next year far in excess of the rate of inflation.

Mr. Kenneth Baker: The hon. Gentleman has quoted some comments about this rate support grant settlement from various parts of the country. Exactly what would he propose instead? Would he increase the grant this year, how would he vary its distribution, by how much would he put it up from 46·5 per cent.? Who would benefit, because if the hon. Gentleman abolishes rate capping, some of the most extravagant local authorities will benefit? Will the rural authorities benefit as well, and if so, by how much?

Dr. Cunningham: Perhaps sooner than he would like, the Secretary of State will have the opportunity to debate a Labour Government's rate support grant report. I am astonished at his surprise at my commitment to abolish the Rates Act. On Second Reading, a long time ago, I gave that commitment, which we retain. As for our distribution of rate support grant, the right hon. Gentleman and the Minister will have to bide their time. They will see soon enough. In every year of office of the last Labour Government the rate support grant settlement was higher

than in any one year of this Government. That is a measure of our record on rate support grant, and it is a record that is a million miles in advance of the miserable performance and proposal that the right hon. Gentleman has put before the House.

Mr. Tony Banks: I am sure that my hon. Friend will make a far better speech on the rate support grant when he is Secretary of State for the Environment, because his material will be so much better. He was talking about how Tory Members should vote when the time comes. Will he quantify these figures, which I hope I have got right? Is it true that the 1986–87 settlement gives London an extra £221 million, while the shires lose about £250 million?

Dr. Cunningham: My hon. Friend has the figures near enough to make no difference on this side of the House. We wonder whether they will make any difference to the Tory side.
The Association of District Councils has given its view of the Government's proposals in this report. Councillor John Morgan, another Conservative, and chairman of the ADC, says of the report:
Ironically, many of those most badly hit by the settlement are those which have always responded to Government exhortations to keep their expenditure within targets set by Whitehall—including many who have suffered severe grant losses in the current year".
Illustrating that, Councillor Morgan said that some of the metropolitan districts that stood to be "most badly hit" ranged from those in the depressed areas of the north-east to others in the south-east stockbroker and commuter belt. He said:
The unfairness demonstrated through the current grant settlement highlights the wholly inaccurate assessment on the part of the central Government of what local authorities need to spend in their own areas.
The Government's rate support grant system is clearly now nothing more than a
crude device to hold down spending right across the board.
That was confirmed by the Secretary of State when he met the executive council of the ACC and said:
The Government was not prepared to support present policies expenditure levels of local authorities"—
whatever their performance in the past. The implications of that statement clearly point to cuts in services and in jobs. Today, almost in a throwaway line, the Secretary of State said that GREA was a measure of need but not a target. The reality of that is that meeting need is apparently not a Government target.
We cannot accept the Government's claim that the settlement will bring major benefits to urban authorities either. Indeed, we reject the principle of taking more resources from rural areas to transfer to the cities, as we reject the implication that urban communities can be helped only at the expense of rural areas, where, often, deprivation can be equally serious and service provision totally inadequate. The Government claim that improvements have benefited metropolitan areas. While any increase is welcome, that included in the report is less than 0·5 per cent. of the national total of grant-related expenditure.
Like other authorities, urban councils are badly affected by the real cuts in the total grant available and by the shortfall, in the Government's view, of current expenditure plans compared with what councils require simply to maintain present levels of community services.


In no way do the proposals make up for the loss of income caused by the abolition of the metropolitan councils and the GLC.
The Association of London Authorities believes that grant gains are more than outweighed by the additional costs resulting from abolition following the transfer of duties and responsibilities. It believes that the Department of the Environment has failed to take proper account of the higher levels of GLC funding of services in many boroughs. This will lead to higher than assumed expenditure and subsequent loss of grant. Councils in Birmingham, Newcastle upon Tyne, Sheffield, Manchester and Leeds might all say the same.
I have a technical point for the Secretary of State. I shall try to put it simply, because it had to be put simply to me so that I could understand it, but it is an important matter nevertheless. It concerns the treatment of grant for metropolitan districts which have taken over services from the soon to be abolished metropolitan counties. Section 80 of the Local Government Act 1985 makes specific provision for the Secretary of State to determine the amount of additional grant which a successor district would have received in 1985–86, the current financial year, if abolition had taken place a year earlier. The purpose of that provision in the Local Government Act 1985 is to ensure that a proper comparison can be made between this year's figures and next year's figures. If the Secretary of State wants to cap gains, as he does, he needs to have a fair basis for doing so.
The Secretary of State has never published what the additional grant would be. For example, Birmingham wrote to him in October 1985 and asked how the figure was to be worked out, but it has never received a reply. To continue the Birmingham example, it appears to the city council that it has been allowed only an additional grant of £2 million, despite being a theoretical major gainer from the new grant system. Prima facie, this appears to be an unreasonable use of the Secretary of State's powers to cap grant gains. I do not expect the Secretary of State to rise immediately and respond, but I hope that we will have an explanation of the implications from the Minister for Environment, Countryside and Local Government when he replies to the debate. If this matter cannot be clarified to the satisfaction of the House, the only proper course is to withdraw the order and resubmit it to the House when the matter has been properly and fully explained.
After seven years of Conservative government the local government finance system is now much more difficult to understand and predict than ever before. The figures issued by the Government on the entitlements of individual authorities are misleading, because they ignore the "close-ending" factor. The Secretary of State cleverly made seductive promises this afternoon to right hon. and hon. Members about what their authorities might get. Does he suppose that responsible councils and treasurers can fix budgets ånd levy rates and precepts on what they might get after close ending? Of course not. He knows that that is a preposterous suggestion. He knows that no responsible local authority would dream of budgeting on that basis or of fixing a rate on that basis, not least because if it did and its hopes were dashed the councillors would be liable to surcharge and disqualification. That is the reality of making wild guesses about what income might or might not be forthcoming. It was absolutely dishonest of the

Secretary of State to suggest that Conservative Members should go into the Lobby and support these proposals on that basis.

Sir Kenneth Lewis: Will the hon. Gentleman give way?

Dr. Cunningham: In a moment. Is the Secretary of State suggesting that they should go into the Lobby on the basis of a wing and a prayer? He knows as well as we do that councils will not budget and fix their rates on that basis.

Sir Kenneth Lewis: I accept the hon. Gentleman's point that we need firm assurances from my right hon. Friend the Secretary of State for the Environment. However, the hon. Gentleman went too far when he suggested that councillors would be surcharged. They could take in more from reserves, on the assumption that they might get this amount from my right hon. Friend and then repay the reserves.

Dr. Cunningham: The House is aware that the implication of that suggestion is even bigger rates increases than many councils are now facing. I do not regard that as either sensible or good management. It would be much simpler and clearer for everybody, the House and local authorities included, if the Secretary of State were a little more candid about what is to be the fate of these authorities.
Large losses of grant under this system seem to be likely in London and in the metropolitan areas next year and in later years because the so-called safety nets and caps are only temporary. Local authorities will still suffer penalties because the report ensures that an additional £1 of spending costs all but a few authorities much mere than £l. In 1986–87, 32 authorities will have their budgets and rates or precepts fixed by Whitehall under the Rates Act 1984. Over 15 per cent. of total local spending is involved. We deplore this major erosion of local democracy and freedom.
Specific grants and supplementary grants have increased disproportionately. Such trends do not make local government more accountable, and they do not reduce central Government interference. On the contrary, they increase it.
This rate support grant settlement introduces the biggest changes that have been made to the system since it was introduced. While targets are dropped, penalties remain under another name. The report attempts to deal with the consequences of abolition and the second year of the Rates Act, but the situation is more confused, uncertain, unstable and unfair than ever before. It fails to meet the needs of local authorities by a massive £1·4 billion, as demonstrated by the updated expenditure group's costing of present policies in 1986–87. The Government have long accepted the basis of those figures.
The report assumes less for the teachers' pay awards than is currently on offer, and it assumes nothing at all for a conditions of service settlement, thus demonstrating to parents and teachers alike the Government's indifference to what is happening in our schools—in particular, the damage to the future careers of the thousands and thousands of people in secondary education.
After six years in office, the Government have run out of excuses. It is to the credit of local government that the determination to fight to preserve its freedom,


accountability, community services and jobs is as high as ever, despite the Government's absymal failures. The Labour party rejects this report. I ask Conservative Members not just to denounce it in their speeches, but to join us in the Lobby to defeat it.

Mr. Francis Pym: I think that all right hon. and hon. Members agree that the complexity of this subject, especially the method of distribution of grant, is such as to make it almost incomprehensible. It feels like a machine that is out of control. It is reminiscent, I find, of Charlie Chaplin in "Modern Times". I rather wish that he had been spared to make a similar film about computers. Any system that is so incomprehensible as this must be unacceptable. Therefore, I congratulate my right hon. Friend the Secretary of State for the Environment on bringing forward his Green Paper on rates reform next week. Obviously we must not prejudge it, and obviously the consultation process will take some time, which I am sure is very wise. But the corollary of the delay in changing the system must be that the present arrangements will continue for some years and will therefore continue to be of significance.
The report before us today disposes of the old penalties and targets which received so much criticism, but in their place there are three new devices that are equally powerful and that hit the shire counties hard. My right hon. Friend gave to the first the elegant title of slope schedules—the point at which grant is reduced as expenditure rises. I am all in favour of a system that provides an incentive to save expenditure, but in Cambridgeshire that point has been set at £127 million, which is 54 per cent. of grant-related expenditure. Grant-related expenditure is the figure that is deemed to be appropriate for the authority to spend, taking into account all its circumstances. Under this system, Cambridgeshire will incur penalties when expenditure reaches a figure that is just about half its GRE: just about half the figure that the Government admit is appropriate for Cambridgeshire's expenditure needs. I call that a very severely set slope schedule. The second device is that of thresholds set at GRE plus 10 per cent., at which point the penalty increases further. It is not applicable to Cambridgeshire, so I will not dwell upon it, but it is a device in the new system.
The third device is that of spending assumptions, which amounts to a type of target. The assumptions are out of line with reality. They make the sums come right from the Government's point of view, but they are unrealistic in terms of local authority expenditure.
The gap between GRE and what used to be targets, which are now spending assumptions, is increasing. In East Anglia in 1983–84 the gap was £25 million. In 1986–87 it is expected to be £75 million. That is in addition to the overall reduction of grant on a national basis from 48·7 per cent. to 46·4 per cent. Cambridgeshire was never up to the national average. In 1986–87 the block grant as a percentage of budget will fall from 37 per cent. to 23 per cent., which is a big drop.
So the result of the report is bound to be a substantial and unavoidable rate rise in the counties in East Anglia, unless services are cut in an unacceptable and unwise way. Bearing in mind that Cambridgeshire is one of the fastest

growing counties, that is unacceptable. Under Conservative leadership my county council achieved considerable additional efficiencies through privatisation of various services, central purchasing and the establishment of computers. In the Department it is well thought of as an efficient and low-spending authority. The parties that now control the council—the Liberals, the SDP and Labour—are considering additional expenditure which I and my colleagues—the Conservative councillors—believe to be unnecessary and too expensive for the ratepayer. Even without that expenditure, a substantial rate rise is inevitable.
I have three basic objections to the system. The first is that it is unfair because it penalises authorities that have been careful, that have shown good management and that have responded positively to the Government's policy of reducing expenditure. The system is in breach of undertakings given to me by the Government two years ago. I and others believe that last year's settlement was in breach, but my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) believed otherwise and we gave him the benefit of the doubt. I cannot say that the undertaking has been fulfilled this year.

Mr. Patrick Thompson: Does my right hon. Friend agree that, despite assurances, the system is still basically at fault? If the political will had been there, something would have been introduced this year that would be fairer to the low-spending councils such as Norfolk county council and Norfolk district council.

Mr. Pym: There is no doubt that the system is at fault, but as so often happens in politics, it is the operation of the system that is crucial. That principle remains so as long as the system exists. I am glad that my right hon. Friends are introducing new plans to change the system.

Mr. Douglas Hogg: Will my right hon. Friend clarify his remarks? The system is at fault, but the cause of the problem is the important matter. The Government have not provided sufficient money from the Exchequer to meet the divers objectives of controlling local government expenditure.

Mr. Pym: It is always arguable how total public expenditure should be divided. My point is that, whatever the limit for local government spending, the system as we know it today is unsatisfactory and I believe that the Government and the House regard it as such.
My second objection is that the system is contrary to Government policy, or, at the very least, a contradiction of Government policy. In respect of the anti-inflation policy, the effect of the report will be to raise rates far more than inflation, however good the management is or however the authorities conduct their business. In East Anglia it is expected that rates will increase between three and five times the rate of inflation. That is inconsistent with Government policy.
The settlement is hostile to small businesses. The establishment of small businesses is a central plank in the Government's employment policy. I support totally the Government's encouragement of small businesses and the grants that they provide. I support the fact that the Secretary of State for Employment is trying to reduce the number of forms and the amount of red tape. Yet we are being asked today to send small businesses a large extra bill for rates. That does not strike me as being coherent.


Another contradiction of Government policy is that payment for services is being shifted from general taxation, which most hon. Members regard as relatively fair, to rates, which are grotesquely unfair. Most hon. Members agree that rates are unfair. It must be wrong to increase taxes by this unfair method of transferring resources.
The third basic objection is that the £200 million worth of extra resources for the inner cities and urban areas, which the Government are rightly providing, is to be paid for entirely by the ratepayers of the shire counties. I believe that it is right to give more support and finance to the inner cities. Their need is greater than anyone's, but that is a national responsibility that should be met in the fairest possible way by the nation as a whole.

Mr. Maxwell-Hyslop: Will my right hon. Friend make it clear that he is not referring to the inner cities of Bath and Hove, which are receiving massive increases in Government funding at the expense of the truly rural areas?

Mr. Pym: I plead guilty to using the jargon of the moment by referring to the inner cities, which are those areas in the older cities that are especially badly hit. However, I do not believe that it is right for the whole amount to be funded by shire county ratepayers, including the commercial and industrial ratepayers, who are the lifeblood of Britain's economy.

Mr. Tony Banks: Will the right hon. Gentleman quantify the amount of money that he understands is being removed from the shire counties in the 1986–87 settlement?

Mr. Pym: It is almost exactly the same amount as the sum being provided for additional resources for the inner cities.

Mr. David Madel: Bedfordshire has been hit hard by the settlement. However, when one talks of shifting shire money to the inner cities, the Government appear to forget that for 25 years Bedfordshire has been helping the inner cities by taking London overspill and paying for all the necessary social services so as to make overspill a sensible reality in Bedfordshire.

Mr. Pym: That is in line with what I have said. My right hon. Friend the Minister spoke about rate equalisation and about how it all began in 1929. Does he not consider that in this settlement he is taking that sound principle—which should remain part of any system—too far?
I believe that my objections to this report are formidable. However, I strongly support giving incentives for greater efficiency and economy. It is right to encourage authorities to spend less and to save money. By applying that sound principle too harshly, I suspect that the results could be counter-productive.
It is clear that I am not in favour of the settlement. However, the Secretary of State says that there is to be a recycling of extra funds, which is extremely welcome and which should help. If Cambridgeshire receives the £5 million that the Secretary of State speculated that it might receive in certain hypothetical circumstances, the problem is not solved, but it is helped. On my calculations, the difference in Cambridgeshire would be a rate increase of

about 20 per cent. instead of one of more than 25 per cent. That would be extremely welcome, but it is none the less a large increase.
I hope that we shall hear more tonight before the vote is taken, and that the Government will reconsider the distribution of available resources, because that would make it possible for me and some of my right hon and hon. Friends whose constituencies are similarly affected—and for the Government—to keep faith with our ratepayers.

Mr. John Cartwright: Those of us who are masochistic enough to be regular attenders at these debates will recognise several themes that regularly flow through our discussions. The first, complexity, was mentioned by the right hon. Member for Cambridgeshire, South-East (Mr. Pym). To be fair, rate support grant has never been easy to understand. I recall the criticisms levelled at the old regression analysis system. However, when the Government came to office, they assured us that their Local Government, Planning and Land Act 1980 would give us a system of distributing rate support grant which was more logical, defensible and comprehen-sible. The trouble is that legislation rapidly followed legislation, and every year has seen a major change in the administration of the rate support grant. To accuse the present occupants of the Treasury Bench of being adherents of Leon Trotsky is an unusual charge to make, but when they approach local government finance it seems that they believe in the Trotskyist theory of permanent revolution.

Mr. Robert B. Jones: When the Local Government, Planning and Land Act was being considered, I was the Conservative whip on the Association of District Councils. My right hon. Friend the Member for Henley (Mr. Heseltine) was trying to dream up a simple system, but the local authorities kept saying, "You must have this factor and that factor". Of course, it became more and more complicated and we ended with a much more complicated system than was originally proposed.

Mr. Cartwright: That is an inherent criticism of the attempt to establish a GREA approach. We cannot blame local government for some of the legislation that came thereafter, including the Local Government Finance Act 1982 and the Rates Act 1984. Whatever the reason, we ended with a system of local government finance which was so complicated that the Audit Commission commented last year that many officers and members of local authorities had totally abandoned any attempt to understand it. To some of us, it became patently obvious that the Ministers responsible for it did not completely understand it, either. Like Frankenstein, they created a monster which got out of control. Like Frankenstein, they then took fright and promised that we should have simplification.
As a trailer to this rate support grant settlement, on 25 July last year, the right hon. Member for Wanstead and Woodford (Mr. Jenkin) assured us:
The RSG settlement that I am proposing will be less complex than in past years."—[Official Report, 25 July 1985: Vol. 83. c. 1317.]
On that basis, many right hon. and hon. Members will have turned eagerly to the documents that support this


year's debate. Anyone who has tried to read them and to master the complexities of caps, nets, close ending and grant recycling will have been sadly disappointed. The most pointed comment about the alleged simplicity of this year's settlement came in the circular letter from the Association of County Councils, which apologised for the fact that it had not produced its normal detailed brief on the settlement. Its reason was that
the RSG Settlement this year is so complex that a full brief would either be a very lengthy document indeed … or it would be incomprehensible to the non-professional reader.
So much for simplicity.
The second theme of the debate is uncertainty, which the Secretary of State also mentioned, in the operation of the system. Local councils have been forced to await the results of the RSG settlement, rather like a punter waiting for the result of the annual lottery. Like a lottery, the rewards seem to bear little or no relationship to the efficiency, effectiveness or spending performance of the authority. Last year, the Audit Commission said this about the situation:
There are too many unnecessary uncertainties inherent in the system. These inhibit authorities from planning ahead.
The Audit Commission went on to say that local authorities had been building reserves at the rate of at least £400 million a year during the past three years, which was more than 2·5 times the average rate of increase in the period before 1981–82. The reason is easy to understand. The Audit Commission believes that the unpredictability of the system encourages local authorities to build up reserves as a prudent hedge against the uncertainties of the future.
This year's settlement is no different; it has built in uncertainty once again. London and the metropolitan areas appear to have done well, but the safety nets and caps that protect them are only temporary. The authorities that have gained this year know only too well that their apparent gains can be snatched away in next year's spin of the Secretary of State's roulette wheel. The pattern of our RSG settlements during the past six years has been that one year's winners can be the following year's losers in Marsham street's version of snakes and ladders.
The third issue that constantly crops up in such debates is that of fairness between authorities. On 25 July, the right hon. Member for Wanstead and Woodford promised that the new arrangements would be
fairer to responsible, low-spending authorities."—[Official Report, 25 July 1985; Vol. 83, c. 1317.]
The results, as we have already heard, are very different. The settlement has had some extraordinarily bizarre effects. For example, Gillingham district council could cut rates altogether because of the RSG bonanza that has descended upon it from the heavens of Marsham street, yet neighbouring authorities in Kent have done badly. Ashford faces increases of 19 per cent., Sevenoaks of 15·5 per cent. and Tonbridge and Mailing of 16·5 per cent. Two other authorities—Bath and Hove—are in the happy position of being able to set a zero rate as a result of the RSG settlement. Small wonder that the Bath city treasurer is quoted in the Local Government Chronicle this week as saying:
We are looking at it as a one-off bonus.
Others have not been so fortunate. When the initial announcement was made by the former Secretary of State last July, the hon. Member for Dorset, South (Viscount Cranborne) sought confirmation that what he called,
the history of financial rectitude by the county of Dorset
would be recognised. The right hon. Member for Wanstead and Woodford assured him:
Dorset will find that it has its rewards in this rate support grant settlement."—[Official Report, 25 July 1985; Vol. 83. c. 1325.]
I have examined the figures and I understand that Dorset will lose £15 million of grant if it spends at GRE level, and it faces an implied rate increase of 30 per cent. I am not sure whether that was the sort of reward that the hon. Member for Dorset, South had in mind.
The right hon. Member for Cambridgeshire, South-East told us about the problems in that county. He will recall that he and one of his hon. Friends pressed the former Secretary of State hard for assurances that if Cambridgeshire followed a spending pattern similar to the one that it had followed in the past, it would not be penalised in the RSG settlement. Those assurances were given. I have examined the figures for Cambridgeshire, and I understand that if the new administration's medium-term plan was followed it would imply a rate increase of 32·2 per cent. That includes an improvement in services. If Cambridgeshire spent at the GREA figure, it would imply a 28·1 per cent. rate increase. But if Cambridgeshire was not to improve services at all—if it remained at a standstill—it would still need a 23·3 per cent. increase in rates. That is a strange way of honouring the undertakings that were given last July.
On the overall impact of the settlement, right hon. and hon. Members have mentioned the fact that once again there is a reduction in the proportion of local authorities' relevant spending met by Government grant from 48·7 per cent. to 46·4 per cent.—the sixth successive year in which there has been a reduction. The proportion has decreased from 61 per cent. in 1979–80 to 46 per cent. next year. The Association of County Councils estimates that this latest drop is equivalent nationally to a 7·8 per cent. increase in rates, which clearly undermines the Secretary of State's suggestion that rate increases next year will be no higher than those of this year.
The Secretary of State has confirmed the consistent policy of switching the burden of paying for local services from national taxes, which are broadly fair, to local rates, which can be extremely unfair. It will strike many ratepayers as a strange way of fulfilling the Government's undertaking to protect them.
I noticed that the Secretary of State sought to justify that cut in the proportion of local council spending met by national taxation by implying that it improves local accountability. That is an extraordinary argument. It is true that some who have argued for increasing local accountability have said that dependence on central Government grant is a threat, and that grant should be reduced. But this must be accompanied by a new source of independent finance to enable local government to stand on its own feet. The Government have given us the worst of all worlds. We have a cut in the proportion provided by the national Exchequer and ever-tightening restrictions on local authorities to prevent them from using their one and only source of income—the rating system.
The situation on GREAs is again extremely unsatisfactory. I object to the way in which Ministers


constantly parade GREAs as a model of scientific and impartial assessment. All hon. Members know of the considerable deficiencies in information going into those assessments, which cast great doubt on their validity, and certainly help to produce their rather strange results. It is also suggested that GREAs are the result of detailed consultations with local government. Yet the Secretary of State made it absolutely clear in his statement on 18 December that, although he had received many representations from local authorities about the deficiencies of GREAs, he had rejected them all and decided to continue with his own approach. That is a strange definition of consultation.
It is clear that GRE is being asked to do things which it was never intended to do. That may be justifiable as a way of distributing grant, although I have grave reservations about that, but it is certainly not justifiable to use GREA arrangements to control local spending. In recent years we have seen a cynical manipulation of the GREA machinery, which is why there is widespread distrust throughout local authorities of the whole GREA exercise.
Like other hon. Members who have spoken in the debate, I welcome the Government's intention to provide more resources for the inner cities. However, their targeting seems to have been a little inaccurate. I cannot understand why Gillingham, Hove and Bath should be the recipients of so much extra help when some hard-pressed inner city areas have not done so well. I strongly endorse what the right hon. Member for Cambridgeshire, South-East said. If we want to produce more resources for the hard-pressed inner city areas, that should be a national responsibility, funded from national taxation, and should not be paid for by adding to the burdens of ratepayers in the shire counties who often have inferior services and who may have grave difficulties in meeting the extra burden involved as a result of the changes.
In Greater London the total grant has increased in cash terms by £221 million. That is presented as a generous settlement for London. However, many of those gains could be dramatically reduced or wiped out. First, they are only cash increases, and in real terms they are equivalent only to increases of £166 million. Secondly, they depend on the Government's assumption that councils will spend at 1985–86 budgets plus an increase of 3·4 per cent. The transitional costs of abolishing the GLC make that unlikely, and if the councils spend at the 1985–86 budgets with an increase of 4·5 per cent., which is the Government's assessment of inflation—in other words, if spending genuinely stands still—the benefits of the extra rate support grant will not be £221 million, but in real terms only £130 million. Even that could be threatened as a result of levies being imposed by the London Residuary Body. They are being charged, not on a rateable value basis, but per head of the population. The first indication suggests burdens between £3·6 million and £8·6 million per borough, depending on size.
I welcome what the Secretary of State said about the possibility of easing those burdens. However, for rate support grant purposes the levies count against the boroughs' spending, although boroughs have absolutely no control over them. The grant mechanisms impose high costs on London councils which increase their spending. The more that councils spend or are deemed to spend, the more grant they lose. That could mean that London ratepayers will face a double blow. They could first face

the problem of paying the residuary body levy, and then have to pay higher rates to make up for grant losses caused by the levy. I hope that the Secretary of State will not merely seek to ensure that the levies are reduced, but will consider the rate support grant element, and try to ease the impact of the levies, either by providing additional GRE for the London boroughs involved, or by disregarding all or part of the levy for the purposes of the penalty arrangements.
The much-publicised new approach set out today seems to have produced a chaotic mess. The Audit Commission and the Public Accounts Committee have cruelly exposed the defects of the present system. The most appropriate epitaph came in the editorial of the Local Government Chronicle on 17 January which stated:
The government's tinkering has only served to illustrate rather than correct the failings. It has done nothing to deal with the basic flaw identified by the PAC and establish a clear relationship between a council's spending decisions and the rate that is set. At present a council can spend vast amounts above the rate of inflation without penalty and without increasing its rate whereas other councils can hold spending and yet be forced into increasing rates massively. Councillors are bemused and the public just plain fed up.
That is an accurate assessment, and that is why we shall vote against the orders tonight.

Several Hon. Members: rose—

Mr. Deputy Speaker: Order. Many hon. Members are waiting to speak. I am sure that the House will appreciate brief speeches and minimal interventions. I call Sir David Price.

Mr. Anthony Nelson: On a point of order, Mr. Deputy Speaker. I do not wish to detain the House, but it is within your recollection that my right hon. Friend the Secretary of State said that a paper relating to the reallocation of moneys for various shire counties would be placed almost immediately in the Library. As it seems material to our debate and it is now more than two hours since he spoke, will you make inquiries why that essential paper is not yet available to hon. Members?

Mr. Kenneth Baker: I have asked for the paper to come, and I will check immediately where it is.

Sir David Price: I shall be as brief as possible, and I hope that the House will bear with me if I go at a gallop.
As my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) told us, the reports are bad news for the shire counties. The House will not be surprised to know that Hampshire is no exception. In view of your injunction to be brief, Mr. Deputy Speaker, I shall not go through the details as they affect Hampshire. I am sure that they are similar to the effects on many other counties. I shall content myself by summarising the position as I have it in a letter from the leader of Hampshire county council. It states:
Hampshire's past record in restricting its expenditure levels whilst maintaining efficient services is exemplary. Its ratepayers, both domestic and business, will feel badly let down when they realise that these efforts are unrecognised and in a single year could be asked to pay one fifth more for their service.
I expect that that is the experience of many of my right hon. and hon. Friends in other shire counties.
Regarding the assumptions behind the reports, I see three major errors in the Government's calculations. First, they have assumed no element of real growth. Overall


Government policy is full of growth consequences for local government, and I shall give three examples. The first is the new youth training scheme and the merger of mode A with mode B. The move from one to two years will have considerable financial consequences. The second relates to the consequences year by year of joint funding with the National Health Service. The House will know that initially that is gentler in its expenditure consequences on local authorities, but that as the years progress the local authority takes over more of the cost of the particular scheme. Therefore, there is a higher expenditure for the local authority. Thirdly, there is the move towards more care in the community. As a member of the Select Committee on Social Services, I am a strong supporter of more care in the community, but it was made clear in the Select Committee report that that could be achieved only by a transfer of resources from the NHS into local authorities and to voluntary bodies.
The second error is the lower rate support percentage grant. My right hon. Friend the Member for Cambridgeshire, South-East and other hon. Members have spoken about that. If we had an entirely reformed structure of local government finance and local government taxation, there would be a strong case in favour of such a move. I believe that my right hon. Friend the Secretary of State has anticipated such a change and he is bringing in one of the bonuses of such a change before the change has taken place. It is rather like spending the income from a new job for which one has applied before one gets the job.
The third major error concerns the shift in grants from the shire counties to the deprived inner city areas, and in particular to London. Like some hon. Members who have already spoken, I agree entirely with the policy of more resources going to deprived areas. However, I strongly object to the fact that the shire county ratepayers will have to finance that. In any reformed model of local government taxation, even one in which counties like my own might be asked to pay virtually the whole of their expenditure if they were equipped with the proper taxation, it would still be proper that the national taxpayer should pay for the extra aid that went to deprived areas. That was the concept behind the original deficiency grant system. I suggest that we return to the principles of that system.
For the three substantial reasons that I have described, I believe that these reports are most unsatisfactory. The heart of the matter is the inadequacy of the rating system as the sole source of local government taxation. Hon. Members will know that I have been a consistent critic of the rating system for many years. I remind the House that in February 1970, in the debate on the Redcliffe-Maud report on the reform of local government, I said:
To discuss local government reform without having proposals for the reform of local government taxation is like attempting to act the Prince of Denmark without Hamlet."—[Official Report, 18 February 1970; Vol. 796, c. 513.]
That has remained my consistent view.
I should like to remind the House briefly why the rating system is so inadequate, unsatisfactory and certainly untenable as a method of redistributing resources from the shire counties to the inner city.
First, the rates form too narrow a tax base to be the sole tax available to modern local authorities, with their

extensive responsibilities and the inevitable financial consequences. One immediately thinks of education and, increasingly, of the social services.
Secondly, the rates bear little relationship to the ability to pay. They are regressive. Thirdly, the liability to pay rates bears no relationship to the individual ratepayer's use of the services provided. Fourthly, the capacity to pay local taxes brings us to the current complaint from commerce and industry about the burden of rates upon their enterprises. I was interested in what my right hon. Friend had to say on that matter, as that is extremely pertinent.
Fifthly, as a tax the rates are not buoyant. They do not keep pace with the growth of local authority services, and they are not inflation proof. Sixthly, the rates do not necessarily produce the same income for individual local authorities with similar needs. Indeed, they often do not.
Seventhly, there is the uneven and inconsistent nature of domestic valuation. All hon. Members know that this has been a major source of complaint. Eighthly, there is the related criticism that when there are extra earners in some households who use the local services, they do not pay extra local taxes. That is a familiar criticism. Finally, domestic rates are a tax on property betterment, even when that betterment is in direct line with national policy.
I am conscious of the fact that many of my right hon. and hon. Friends wish to speak. Those are just a few of the major criticisms of the rating system as a form of taxation. They are a devastating sum of criticisms, so I am astonished that my right hon. Friend the Secretary of State, whom I regard as realistic and progressive in these matters, should bring forward reports based on the assumption that the rating system is a proper mechanism for the redistribution of resources. I believe that it is not.
If my hon. and right hon. Friends on the Government Front Bench think that I am being excessively aggressive to the Government and their problems, I should like to quote the following words:
We are all concerned about very high rates. The system was never designed to bear the levels of taxation now being placed on it."—[Official Report, 4 November 1981; Vol. 12, c. 20.]
I agree with that, and I should like to consider with my right hon. Friends who said that. That was a quotation from my right hon. Friend the Prime Minister in her speech in the debate on the Address on 4 November 1981. That was four and a half years ago, when the Prime Minister was proposing the legislative programme for that year. My right hon. Friend was then promising a Green Paper on rate reform.
With that form of authority, I suggest to the House that those of us who are unhappy with the reports, and who will find it impossible to vote in favour of them, are being consistent with the leadership of the Conservative party. I am disappointed that my right hon. Friend the Secretary of State finds it necessary to bring these reports before the House. I was not elected to the House to be oppressive to Hampshire and reports are oppressive to Hampshire and the shire counties—

Mr. Christopher Chope: rose—

Sir David Price: —without fulfilling any countervailing national purpose. I shall therefore be unable to support the Government today.

Mr. George Park: I shall try to continue the endeavour to be brief.
There are few people who pay their rates without some sense of disgruntlement. That is hardly surprising, considering the complexity of the subject. Even the permanent secretary at the Department of the Environment admitted, under questioning in the Public Accounts Committee, that only 20 or 30 people in the Department fully understood the complexities, although others were experts on certain aspects.
Realising how unpopular the rates were and are, the Prime Minister decided that they should be abolished, totally ignoring the many efforts over the years to do just that. But the Prime Minister also ignored the fact that it is much easier to point to the faults in the rating system than it is to come up with a viable alternative. The present Secretary of State for the Environment is the latest recruit in a line of predecessors trying to carry out the Prime Minister's wishes. Not that they have not tried. Each in his turn has tinkered with the system making it more divorced from reality at local government level, more complicated, and shifting the goal posts halfway through the financial year so that forward planning is impossible.
Only one aspect is consistent—the steady reduction in the amount of support for local authorities. That forces local authorities to increase the rate poundage if they are to maintain their services and employment at the present inadequate levels, thus confirming the view fostered by the Government that local authorities are spendthrifts. Despite the fact that local authorities keep to their budgets far better than any Government of whatever political complexion, their efforts to explain the situation through local news sheets is now to be stifled at birth.
The Secretary of State is no exception to the tinkering that has gone on. In his announcement of the rate support grant settlement for 1986–87, he abandoned the targets which had been a feature of the grant system since 1981–82 and replaced them with new block grant mechanisms, combined with the grant changes made necessary by the abolition of the GLC and the metropolitan counties, making the 1986–87 settlement the most difficult to comprehend since the new grant system was introduced. It is small wonder that the shire counties are complaining that it is unfair to expect their ratepayers to bear an extra burden as a result of a policy decision to give more help to inner cities.
The letter sent by the Association of County Councils to all hon. Members has already been quoted. The association contends that the current expenditure plans are deficient by more than £1·4 billion, compared with the updated expenditure group's costing of local authorities' present policies in 1986–87. It contends that the Government have long accepted the basis of these figures. Moreover, the £1·4 billion assumes less for the teachers' pay award than is currently on offer, and nothing at all for a "conditions of service" settlement. The deficit may therefore be even greater. The Secretary of State's explanation still leaves a gap to be filled by local authorities. It appears that the outcome will be a substantial overspend relative to the Government's plans—as I said earlier, there will be large rate increases unless balances are plentiful—or cuts in services.
I appreciate the dismay of the shire counties, but it should not he thought that metropolitan districts are faring

any better. The national cash freeze on rate support grant means that the proportion of local authority spending that is met by central Government has fallen again, from 47·4 per cent. to 46·4 per cent. That will cost the ratepayers of Coventry over £2 million—the equivalent of a 5p rate.
Nor does the abolition of the old system of targets and penalties mean that the Government are not still controlling local authority spending. Settlement is based on local authorities spending 3·4 per cent. more than the 1985–86 budget, and penalties are now imposed through loss of grant for spending more than that. Under the new system, Coventry city council will lose grant of £5 million for so-called overspending. The city council disbenefits especially from the new system because its expenditure is higher than the Government's measure of need—the grant-related expenditure assessment—despite the fact that it has never spent more than its target. Such "overspending" will add at least 11p to the city council's rate. Yet it is an authority whose real expenditure is under control and has even fallen slightly compared with 1985–86.
The abolition of the previous system of targets and penalties is not neutral in its effects because of the high. Government-set, maximum rate precepts and expenditure limits for the joint boards, which are being treated more favourably than local authorities. That is likely to cost Coventry ratepayers over £7 million, which will mean another 17p on the rate. Coventry ratepayers face a rate increase of up to 30 per cent. in 1986–87, which can be reduced only by measures which will increase the 1987–88 rate.
The national distribution of grant is crucially dependent on the expenditure assumption of 3·4 per cent. above 1985–86 budgets. In the longer term, as the temporary multipliers are withdrawn—that is, the series of arbitrary caps and safety nets on particular system changes—ratepayers in the metropolitan areas are likely to fare worse because of the impact of the new grant mechanisms.
Far from being simpler and fairer, local authorities face a mass of technical complexities, distortions and uncertainties. To suggest that it could be illegal for local authorities even to attempt to explain this maze to their ratepayers is adding insult to injury. To say, as the Secretary of State did, that he is in favour of more local accountability is to fly in the face of the facts.

Sir Ian Gilmour: Like everyone else who has spoken so far, I am in favour of giving more money to the inner cities, but that is a red herring in the context of this debate. There is every reason to give more money to inner city areas, but that should be done by increasing the rate support grant or by general taxation. There is no reason why it should be done at the expense of shire counties. I realise that the fault lies with the Treasury—which can think of nothing other than reducing income tax—not with my right hon. Friend the Secretary of State for the Environment. Therefore, the Treasury is squeezing my right hon. Friend. However, he is in the unfortunate position of being responsible for Government policy. I am not criticising him personally except in one respect to which I shall come later.
I shall proceed from the particular to the general and use the Buckinghamshire county council to demonstrate the full idiocy of the system. My hon. Friends the Members


for Milton Keynes (Mr. Benyon) and for Beaconsfield (Mr. Smith) have asked to be associated with my remarks about Buckinghamshire.
No one suggests that Buckinghamshire county council is inefficient, badly managed or extravagant. Indeed, it is extremely efficient, economical and well managed. It does a great deal to try to obtain value for money. No one has ever criticised it for spending too much. Indeed, some have criticised it for spending too little. All the evidence shows that its expenditure is at average or below average levels compared with other authorities. In common with all authorities, a great deal of its expenditure is fixed, and that part of its budget cannot be touched in any way. For example, it cannot sack 100 teachers or put them on half pay. The idea that there is scope for substantial economies is moonshine. There must be a substantial increase in expenditure if only because, contrary to what my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) said, Buckinghamshire is the fastest-growing county in the country and obviously needs additional resources.
How have the Government dealt with the extremely simple situation of an economical and efficient local administration serving a fast-growing population? First, the Government have taken no account of the increased population of Buckinghamshire. Their figures are wrong by at least 4 per cent., or 23,000 people.
Secondly, instead of increasing its GRE by more than the average, they have increased it by less than the average. The Government's new and rather dubious methodology has resulted in Buckinghamshire receiving a GRE that is probably £3 million less than what it would have been.
Thirdly, and as a result of the absurdities of the system, if Buckinghamshire spends its GRE figure next year, which is £236·6 million, it will lose £20 million, or 37 per cent., of its grant compared with this year. In fact, it is unlikely to get its spending down to its GRE figure, and it would probably be disastrous if it did. However, a great deal more is being asked of it than that.
It is true that my right hon. Friend the Secretary of State has said that he would consider the question of burden payments for Milton Keynes, and we are grateful for that. However, that will be only a minor palliative. It remains a fact that the result of what is being proposed is indefensible and unacceptable. It will lead to a rate increase of up to 30 per cent.
That brings me to the point where I take issue with my right hon. Friend the Secretary of State. He should have said from the outset how serious the assessment was for the shire counties. It would have been much better if he had come clean before Christmas instead of producing the answers that he gave to our questions. I draw attention to the answer that he gave me, for a reason to which I shall come, when he said that the Buckinghamshire grant this year is £54 million, that if the present system had continued it would have got only £46 million, and that it had a chance of getting as much as £59 million, £52 million or £50 million. In fact, to get £59 million the county council would have had to cut its expenditure this year, compared with last, by at least 5 per cent. in cash terms; in real terms, taking inflation and a rising population into account, it would have had to cut it by about 20 per cent.
It is inconceivable that anyone should do that. It shows—this became plain at the meeting of which my right hon. Friend spoke—that the Department of the Environment is working from the wrong figures. It got the Buckinghamshire expenditure wrong last year by no less than £12 million. That sort of error produces the kind of idiocies about which we have all been talking this afternoon.

Mr. W. Benyon: A modest householder in my area on the average industrial wage will pay £150 more in rates per year, equivalent on his wage to 2p on income tax.

Sir Ian Gilmour: I agree with my hon. Friend. It is an extremely serious situation. I hope that the Government will think about it when considering tax cuts.
The reason why my right hon. Friend was misled and misleading is, I think, that he thought that if he abolished targets and penalties that was all there was to worry about: everybody would be so pleased by their abolition that no one would worry. I congratulate him on doing that, but the fact is that he has not totally abolished penalties. He has abolished a very bad system and put in its place merely a bad system, so our gratitude is modified. He has not abolished penalties altogether because the so-called "taper", as far as my county council is concerned, works very much as a penalty.
Since 1979 we have had 10 different local government finance systems—more than one a year. The present one is not the worst on record; only the second worst. Like its predecessor, it suffers from two fundamental defects stemming from central Government arrogance. The first is the idea that Whitehall can lay down what local authorities should spend. They simply are not equipped to do it. Every local authority has different needs and different resources. A few civil servants and Ministers, however able, in the Department of the Environment simply cannot know. That is why we get the idiotic things that have been mentioned today. The whole system is fundamentally wrong. There is no basis for the Department of the Environment thinking that it can do what it purports to do, so I hope that it will stop doing it as quickly as possible.

Mr. Tony Banks: So would the right hon. Gentleman be in favour of central Government support to the rate support grant being increased from its present low level of 46 per cent?

Sir Ian Gilmour: That is what I have been saying for the past three years. In other words, what I have opposed is its reduction year after year, because that can only lead to a substantial increase in rates.
Secondly, in pursuit of the dogma that all public expenditure is bad, the Government seek to impose on local authorities quite unacceptable economies. They seem to forget that local authorities have statutory responsibilities. My right hon. Friend is asking local authorities to impose cuts and economies which he would not impose if he had the statutory responsibilities for those services. The Government are asking local authorities to do things that no Minister would conceivably do. Ministers seek only to impose savage and totally unrealistic economies because they provide the money—although it is not enough—and the local authorities provide the services.


That, again, is a fundamental defect of what the Government are trying to do. They should take note of the statutory responsibilities of local authorities.
My right hon. Friend has said that he will announce a new system next week. That is very gratifying, provided that it is not worse than the present one. I am bound to say that, from what I read in the newspapers, I find the idea of a poll tax distinctly unappetising. In any case, as my right hon. Friend the Member for Cambridgeshire, South-East said, it will be several years before it comes about, so we shall have to live with the present system. The idea that we can go on with the sort of absurdity that everyone has mentioned this afternoon is quite wrong. The system is totally unacceptable. The way in which it is operated is equally unacceptable.
The Government are treating Buckinghamshire county council and the ratepayers of Buckinghamshire, both commercial and ordinary ratepayers, in a way which is totally undeserved and quite intolerable. Therefore, I cannot possibly support the motion.

Mr. Stan Thorne: Like other Members who have participated in the debate, I shall confine my remarks in the main to the area that I represent. The effect of these reports on Lancashire will be catastrophic. There will be rate rises later this year on an unprecedented scale. It will be a question of record rate rises or massive cuts.
If one looks at the alternatives to cutting spending, one sees that there is no choice at all. Reports prepared by county council officers outline the effects of cuts of up to £25 million on the people of Lancashire. They make extremely grim reading. The figures show that just to continue spending on services at their present level would mean a rate rise of more than 46p in the pound.
If Lancashire were to cut spending by £25 million—a move which could be achieved only by sacking 2,500 employees—ratepayers would still be faced with a rise of more than 25p in the pound. Teachers would have to be sacked. Fire service manpower would have to be reduced. There would have to be fewer police officers, at a time when more are needed. Not only would the increasing demand for home helps, for example, not be met, but there would be a fall in the number now provided. Homes for the elderly would close, concessionary bus travel would be scrapped, fire engines would be taken off the road, libraries would close and roads would be left to deteriorate.
Many of these forced cuts would affect the young, the elderly and the disabled. The Labour group on the Lancashire county council will not be party to cuts of this magnitude. Its members will not make wholesale redundancies. To do so would make a mockery of everything worth while being done by Lancashire county council to create jobs in its area.
In common with many other shire counties, Lancashire did not create the crisis in local authorities. The Government must accept full responsibility for the situation. They have demonstrated ever since 1979 that they have not the slightest interest in the welfare of the people of Lancashire.
In an intervention, the hon. Member for Lancaster (Mrs. Kellett-Bowman) referred to profligate spending in the Lancashire area. With myself and others, the hon. Lady attended a meeting last week in the House, called by the Lancashire county council, to consider education, the

rapidly falling level of building maintenance and the rising number of old schools that require replacement. At that meeting she said nothing about profligate spending. I am sorry that she is not in her seat at the moment. It seems possible that when local authority delegations come down to the House Conservative Members can say one thing and then, in a different situation in the House, say something totally different.
Happily, Preston borough council has some reserve funds. In 1980, when the £2 million subsidy to the housing revenue account wiped out the Government's policies, the council dipped into those reserve funds. Preston has some appalling deprivation. In areas such as St. John's, Ullswater road and Deepdale it is worse than in parts of inner London. In several blocks of high-rise flats in the central ward of Preston the unemployment rate is 77 per cent. Not only do the people there reside in bad housing, but there are many one-parent families and deprivations of various types. It is to such inner town areas that the Government are said to be allocating special resources.
Preston should be spending nearly £13 million. The Government say that it should spend £9 million. It will again have to seek recourse to reserve funds. That cannot go on, because the reserves will soon run out. Preston needs £13 million for capital expenditure, but it will be able to spend only £2·6 million. Housing capital schemes must be cut from £10 million to £1·5 million. It is against such a background that public expenditure on other services has been cut. Ambulances in the Lancashire area will be cut. Public expenditure on hospital beds is highly questionable, and we are facing major problems in education in terms of school repairs, books and so on.
I mention only one aspect of housing, because several cases have come to my notice recently. On the basis of the Government's public expenditure plans, nothing can be done to alleviate the circumstances of disabled people who require minor adaptations to their homes to make them more accessible or to make it easier for families to cope with their disabled relatives.
I hope that Conservative Members who have received the same letter as we have from the Association of County Councils will heed its request and vote with us tonight against the Government's policies.

Mr. Robin Maxwell-Hyslop: This is a short debate, so short that we might have had the presence of the Secretary of State for a more generous proportion of it, particularly as it started late because of the statement on the Channel tunnel. I asked him to be here and he is not, so I am not very pleased with that for a start.
To set the scene, although targets have now been abolished, the system of penalties that has replaced them is based on the expenditure levels themselves formed by the target system. So already we start with levels of expenditure distorted by the target system. In fairness, and in setting the scene, I must point out that many of the low spenders, certainly those in my part of the world, have a posture of low spending not least because they were robbed during the tenure of the Labour Government, including when they were kept in office by the Liberals between 1974 and 1979.
It is as well to remember that—and the right hon. Member for Plymouth, Devonport (Dr. Owen) has not shown his face in the debate to date, and nor has the leader of the Liberal party—the alterations in rate support


grant between 1974 and 1979 while the Liberal-supported Labour Government were in office deprived Devon, to take one example, of £36 million. So it started from a low base, and, as with many other county and district councils, the target system was imposed immediately after my right hon. Friend the Member for Henley (Mr. Heseltine) had introduced the grant-related expenditure system, and stated that never again would the low-spending councils be made to pay for the sins of the high-spending councils. He then introduced a target system which did the exact reverse of what he had undertaken. That is the history leading up to where we are today.
There has been much talk about the needs of the inner city areas; but is Bournemouth or Hove an "inner city area"? I believe that Hove will not be charging any rates at all because it does not know how to spend all the money that it will get out of the system. What about the district councils, about which we have heard so little? I shall give a second example from Devon, not because the problems of Devon are of obsessive interest to the House, but to illustrate what is happening in an area which I know best. What will happen to the impoverished rural councils which have a posture of low expenditure because their resources are so slender and because they have incomes so much lower than the national average and populations so dispersed?
We were glad to see my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) recovering and back in the House last week. [HON. MEMBERS: "Hear, hear."] West Devon will, if it increases its expenditure by what the Government consider to be only a standstill amount in real terms, get 2·54 per cent. more. Bournemouth will get 32·63 per cent. more. Mid-Devon, most of which is in my constituency, will get 2·8 per cent. more. Torbay—an "inner city"?—would get 15·3 per cent. more. Exeter, not noticeably poor, will get 23·5 per cent. more. Plymouth, bursting with money from every direction, will get 30·94 per cent. more if its expenditure is at a standstill in the Government's own terms compared with 2·54 per cent. for West Devon and 2·8 per cent. for Mid-Devon. What sort of madness is that?
Did the Secretary of State intend that or did it happen by negligence? He altered the composition of the formulas to try to achieve something. There is a case to be made for inner cities such as Liverpool, Leeds, Birmingham and parts of London: but that is a case for a transfer of funds from the fairest possible taxation system, which is the Government one which, presumably, my right hon. Friend supports as a member of the Cabinet, rather than by imposing further burdens on a notoriously unjust taxation system, which is the present rating system. We do not need another Green Paper, we need legislation. Until that legislation comes, we do not need a further transfer of the burden from the system of Government taxation under the direct control of the Cabinet in every Budget. That is where more of the burden should be borne until there is a replacement system of local government taxation. We should not go on, year after year, transferring more of the burden, from what is either the most just central Government system—if not, my right hon. Friend the Secretary of State and the rest of the Cabinet should be doing something about it—to a system that the whole Government reject as deficient of logic and equity.
I believe that it is right for me to castigate the Government in this way, but there is no reason for complacency from the Opposition or the alliance. Devon is now controlled by a witches' brew of Liberal, SDP and Labour Members. There is not a single SDP Member in the Chamber, including the right hon. Member for Devonport
The leader of the council issued a press statement that is in today's papers saying that the council has written to all Devon Members and that he wants the letter used in today's debate. The letter was sent at 9.45 on Friday night to the House of Commons, not to Members' homes. No Members are here on Saturday and Sunday and they were not told that the letter was on its way. The hon. Members concerned had to look through 150 letters to find it, even if they did know that it was coming. That is the incompetence that adds to the matter. I had to read over that letter once I was in the Chamber. There are two arithmetical mistakes on the key figures on the front page, and the quantum of the clawback assumption is not quoted anywhere in the letter. As a result I dare not use the figures that the alliance-controlled council has asked me to use because of the evident errors in the ones that I have been able to check. I am not pleased about that.

Mr. Simon Hughes: rose—

Mr. Maxwell-Hyslop: If the hon. Gentleman can produce a member of the Social Democratic party, I will give way. The fact that there is not a single SDP Member present in the House deprives that party of any say in the matter.
When we look at the increased burdens that local government is asked to finance from a decreased percentage contribution from central Government, I have to ask my right hon. Friend the Secretary of State how he can expect county councils to take on an increasing burden from the National Health Service by joint funding when it is receiving a decreased percentage of its revenue from central Government, and is being subjected to penalties if it increases its expenditure. That does not make sense. At district council level the Government continue to impose more and more burdens. If the Government pay for the extra burdens that is fair. If they say that district councils are more efficient in their administration—as Devon ones certainly are—there is a case for that. There is no case when they do not pay for it.
The Government passed the Housing Defects Act 1984 forcing district councils to buy back defective houses. That left district councils with an enormous bill to pay. In Mid-Devon the whole of the housing investment programme will be used to pay for defective houses and rehousing the people from them for the next five years. It will also have to pay for the sudden emergency need to rehouse people who are moved out while the work is done. It is enjoined to use the most economical treatment on the house. Is it economical to repair, at great expense, a house with a life expectancy of not more than 10 or 12 years, instead of building new ones?
In the previous Parliament, when we gave the right to buy—of which I approve—we included a protection for designated rural areas where it was impractical to build more council houses so that the local housing authority could buy back those houses if necessary when they come on to the market, rather than letting them go as holiday homes. That has been nullified by the financial restrictions


that completely prevent local authorities from buying back those houses. One must not forget that a former Minister for Housing and Construction amended the original Act to weaken the safeguards. There is not enough council housing in rural areas now for old people, many of whose needs would have been met by their sons and daughters or nephews and nieces. They have to move into the towns, where there is nobody to look after them unless they live in warden-controlled bungalows at extra cost to the ratepayer. What provision is made for that by central Government? None.
It is the refusal of central Government to live with the consequences of their expenditure legislation that is becoming so intolerable. That goes on apace because Ministers will not look at the expenditure implications of the legislation that they put through the House. If they can pass the burden to another Department of State involving the same amount of Government money, they imagine that they have in some way eased the public sector requirement. They have not. If the burden is transferred from the Department of Health and Social Security to the Department of the Environment, the Chancellor of the Exchequer still has to budget for it. If it is transferred to district or county councils, they need more money from central Government, not less.
I say to my right hon. Friend the Secretary of State that this nonsense cannot be met by pushing out another Green Paper. It requires legislation to reform local government finance. There is nothing left to be said in the debate about the reform of local government finance that has not been said since 1964. There have been Royal Commissions and committees of inquiry. There is nothing left to say but there is much left to do. My message to my own Government is to stop transferring the burden from the central Government taxation system to the local government taxation system. The local government finance system is utterly unjust for reasons given earlier by my hon. Friend the Member for Eastleigh (Sir D. Price). I do not need to repeat those reasons. Until that has been remedied, central Government must pay for a higher not smaller proportion.
That is why I shall vote against all of the reports tonight. I believe that many of my hon. Friends, with great reluctance, will also vote against them.

Mr. Tony Banks: This is probably the most enjoyable rate support grant debate that I have been able to listen to. The speech of the hon. Member for Tiverton (Mr. Maxwell-Hyslop) only enhanced the level of my enjoyment. As in recent years, the rate support grant settlement has taken on the appearance of Marsham street's great annual lucky dip. This year we saw a new Secretary of State playing his role of little Jack Horner sitting in the corner putting his finger in the pie and pulling out a plum. It is a bitter plum for the shire counties and it is a rotten pie all round.
The hon. Member for Tiverton and others have made it clear that the proportion of central Government support to local authorities has declined from 61 per cent. of spending in 1979–80 to 46·4 per cent. in 1986–87. As hon. Members on both sides of the House have said, that is an example of the hidden taxation that has been used by this dishonest Government to transfer tax burdens from central to local government and from the rich to the poor.
The hon. Member for Tiverton could perhaps have gone on to mention the same sleight of hand in which the Government have indulged with regard to gas, electricity and water prices, because they fall into the same category of hidden taxation that the Government have been using.
In last year's lucky dip from Marsham street, the shires thought that they were doing reasonably well. I remember the former Secretary of State. I wish that he were here this evening. I am sure that he would have enjoyed some of the discomfort being experienced by the present Secretary of State, because he experienced it so often himself. He could not pluck up the courage to be here.
With the last settlement, the shires were saying that they had at least reached a reasonable balance, but they were warned that it was not likely to remain because of the way in which the rate support grant system can be manipulated by Marsham street. In last year's settlement, London lost out. This year, the switch in funds is the other way, mainly because of the effects of the GLC's abolition.
The Opposition endorse what the Secretary of State said about putting more funds into the inner cities. We do not think that that should necessarily be at the expense of the shire counties. Of course, the Secretary of State's extreme discomfort at being attacked so much from behind was something that gave the Opposition great pleasure. Long may it continue.
The Government are finding out, with respect to London, just how efficient and cost-effective the GLC is in running London's strategic services.

Mr. Peter Pike: My hon. Friend was making a point about assistance being given to the London boroughs. Does he feel confident that the Government would give as much assistance to the London boroughs this year if local elections were not going to take place in. the London boroughs in May?

Mr. Banks: Not at all, because one realises that it is being done because the 1986 elections in London and elsewhere are on the way. I fully expect that next year's rate support grant settlement, assuming that there is a Conservative Government in control—there is no guarantee of that—will probably be switched back the other way yet again because of the effect of the revolt in the shires. That cannot be something that hon. Members on either side would endorse. We need a degree of certainty in local authority finances, not this constant annual backwards and forwards movement when no one who is responsible for administering public funds and public services in the town and county halls can have any assurance about the future.
The shires are up in arms, and one understands that. I should like the Minister to tell us the amount of money that the shires will lose this year under the 1986–87 settlement. Is it £250 million, £260 million or £266 million? I do not know. I should be grateful for the information and I am sure that Conservative Members would like to know.
We know, because the Association of County Councils told us, that this year's settlement is at the expense of the shire county ratepayers. It is remarkable but, as I said, most enjoyable for the Opposition to see the revolt of the bourgeoisie on the Conservative Benches. It continues Marsham street's amazing ability to get up someone's nose in a big way every year.

Mr. Terry Dicks: It is not just the bourgeoisie that is up in arms. It is the constituents of


Hayes and Harlington in Hillingdon. We have had a 71 per cent. decrease in grant from central Government this year. In fact, because of the machinations of this settlement we shall be out of grant altogether. In 1983·84 we received £21 million from the Government. It is the working class of what is known colloquially as "Ayes and Arlington" which is fed up with this Government and their attitude to the rate support grant.

Mr. Banks: One always excludes the hon. Gentleman from any accusations of being bourgeois. His exceedingly muscular approach to local government, and all other subjects, gives us great amusement. He is merely pointing out something that the Government need to understand. Although there is an overall transfer on this occasion of about £21 million of grant to London, it is very much a differential transfer because some of the outer boroughs, including Hillingdon and Newham, will suffer badly from the settlement. Not all the London boroughs will benefit. In many ways, it is London Regional Transport and the other successor bodies to the GLC which will benefit.
The hon. Gentleman has put his finger on something about which all of us in the House are worried—that the rate support grant system has reached the level of low farce. It is complex, unstable, inherently unfair, and, as I have said, infinitely manipulable.
I shall try to demonstrate the manipulability of the system with regard to London. In broad and relative terms, the rate support grant settlement is good for London. London's grant in 1986–87 is estimated to be £221 million above that to be paid to London authorities in 1985–86. I say relative because the cumulative reduction in grants to London since 1979–80 has been £3·5 billion. That, of course, is the main reason for high rates in inner London.
London's more favourable treatment in the 1986–87 settlement has been achieved by improved GREAs for London boroughs and a technical adjustment to London Regional Transport's notional GREA. The GREA total for London represents an increase of 9·2 per cent. over last year compared with 7·3 per cent. increase in GREA nationally. Here is the sleight of hand—had the GLC remained in existence the GREA attributed to it would have increased by no less than 26 per cent. On the basis of this settlement, the GLC would have received grant of £128 million for spending £770 million—the level of the 1985–86 budget with an amount for inflation—and yet in 1985–86, with that budget, instead of receiving £128 million it received Government grant of only £36 million.
If we add the GLC's 1985–86 GREA to the notional GREA for London Regional Transport, the total GREA for London was up by 63 per cent. in one year. The 1986–87 settlement makes that position even more absurd, because we now have a further 26 per cent. increase in GLC GREA and a 67 per cent. increase in notional GREA for London Regional Transport resulting in a GREA some 11 per cent. greater than the Government estimates of expenditure on those services. Clearly, Marsham street's financial calculations have gone crazy.
Let us compare that with 1984–85 when the GLC allegedly overspent its GREA by 53 per cent. The position becomes more bizarre when one realises the size of the increase in the Government's expenditure target for the council, which increased by 63 per cent. between 1984–85 and 1985–86. That was achieved as a result of dropping the

special rule, which applied only to the GLC. Thus, at a stroke, and using the rate support grant settlement, the GLC was transformed from being a massive overspender against target to an underspender not liable to grant penalties which could be passed on to London boroughs after abolition.
What an act of wizardry. What an act of necromancy by the Secretary of State. I am surprised that with so much expertise he has not already become the Prime Minister.
What was the reason for the switch? As I understand it—perhaps the Minister will correct me if I am wrong—the Government deliberately held down the GLC's targets in 1983–84 and 1984–85 better to accuse the GLC of the overspending which they then used to justify the abolition of the GLC and rate capping.
However, after abolition the effect of transferring those artificially low targets to the London boroughs would have had an adverse effect on the cost of abolition to the London ratepayers, and hence the dropping of the special rule which increased the GLC's targets by some 63 per cent. Now we have lies, damn lies, statistics and the rate support grant settlement. The Government gave costs as one of the major reasons for the abolition of the GLC and yet destroyed that argument with the 1984–85 settlement. We still do not know about costs. Try as one may to get statistics out of the Government about the cost of the GLC, the result is a refusal to give any information.
During the early days the Government plucked a figure of £100 million out of the air and said that that would be the saving to London from the abolition of the GLC. We were never told where the £100 million came from. I have just received another reply from the Parliamentary Under-Secretary of State for the Environment, the hon. Member for Surbiton (Mr. Tracey). I asked if he will make it his policy
to update the estimates of savings and costs regarding Greater London council and metropolitan county abolition given by Ministers during the passage of the Local Government Act 1985 and included in the explanatory and financial memorandum to that Act".
The reply was, no. Marsham street has not the foggiest idea how much abolition will cost London ratepayers. The Labour party, and I suspect the hon. Member for Hayes and Harlington (Mr. Dicks), will say that it will cost a hell of a lot. One has only to look at the circulated provisional budget of the London Residuary Body to appreciate that. We understand that Tag Taylor has been leant on by the great bulk of the Secretary of State and he has changed the budget yet again. When the London boroughs look at the costs of replacing services, especially in the outer parts of London, they will find that they have not got the money from Government to maintain those services. When the charges and levies come through from the London Residuary Body and all the other quangos inheriting services from the GLC, the real cost to London ratepayers will be seen and it will be high.
My own borough of Newham will suffer badly because of the rate support grant settlement. The Minister is well aware of the problems of Newham. According to the Department of the Environment's own calculations, Newham is the second most deprived borough in the whole of England. This rate support grant settlement will not assist Newham. Partnership status would assist the borough of Newham, as would the disregard of the expenditure of £11·5 million for 1983–84 and the revision of the 1985–86 target. I understand that the Secretary of


State has refused this revision of our 1985–86 target. If this situation is left as it is Newham will end up with a revenue deficit at 31 March. Will the Minister or the Secretary of State he prepared to meet a delegation of hon. Members from Newham, councillors and officers who would explain the extreme difficulties in our deprived borough? I would be grateful if the Minister would give an affirmative reply to this.
In the meantime we are left with a patchwork quilt of rate support grant settlement. It is an administrative and economic chaos. The Secretary of State deserves such chaos as his role in clambering up to the top in the Department of the Environment leaves much to be desired. This is especially true with regard to his loyalty to his own predecessor, the poor old right hon. Member for Wanstead and Woodford (Mr. Jenkin) who is not present today, probably because he is too embarrassed to show his face. The rate support grant settlement is a mess and so is the Government's policy on local authorities. The sooner the Front Bench of the Labour party is transferred to the other side, the sooner we will get some order back into local authority expenditure.

Sir Bernard Braine: I should think that it is now painfully obvious to my right hon. Friend the Secretary of State that those of us who represent shire counties are dissatisfied with the way in which the rate support grant has been calculated and distributed. Why should this be? My right hon. Friend the Secretary of State defended what he has done, with his characteristic good humour and grace, on the ground that it is necessary to ensure that total public expenditure is kept within bounds. That is an objective that all Conservative Members share. It is right that local authorities which were overspending—some in a reckless fashion—should be brought to heel. It is right that local authorities should be obliged to curb waste and to avoid excessive rate increases, especially when so many small businesses are struggling for survival. But what is the reality?
I have had the honour to represent an Essex constituency for nearly 36 years and I can safely say that the Essex county council, for the earlier period Labour-controlled and later Conservative-controlled, has always been a prudently led and economically run local authority. Why is it that such an authority—there are others, too—which has for many years been a low spender and done its level best to meet the requirements of successive Governments, and which has been praised by Secretaries of State for its performance in this regard, is now penalised by the formula that the Government choose to determine the distribution of rate support grant?
There is no rhyme or reason in the system they employ. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), in his spirited speech, went so far as to describe it as one of "madness". I do not know about that, but, whatever it is, there is no justice in it. No reasonable person would deny that, given the serious problems of our inner cities, there must be some shift of resources in that direction. The Association of County Councils agrees with this. But it is unfair that the shift should be wholly at the expense of the shire counties, with the result that there will have to he substantial rate increases if the present level of our services is not to be reduced. I understand that the cost of the shift is equivalent to a 5·7 per cent. rate increase. We simply cannot reduce the level of our services.

Dr. Michael Clark: Does my right hon. Friend agree that if, in the Budget in March, there is a significant reduction in taxation, Essex constituents will require all that rebate to pay for increased rates?

Sir Bernard Braine: Yes; that had occurred to me.
If one went into the ramifications of all this, perhaps what my hon. Friend the Member for Tiverton said is correct—that it is madness. The full implications have not been understood by the Government and have not been grasped. How can we reduce the level of services, which are now at the lowest level consistent with our county authority carrying out the obligation put upon it by Parliament? The level of our services is now irreducible. When it comes to finding the resources for the proper maintenance of our school buildings, the situation has reached a dangerous point. Our spending is far below what is required if we are not to face masssive capital expenditure on replacement and reconstruction in a few years time. Under the present system, this will certainly raise the rate. Putting the whole burden of shifting resources to the inner cities from the shire counties is unfair and wrong and—I suspect that many of my colleagues will agree—unacceptable.

Mr. Dicks: Will my right hon. Friend confirm that today he is making the same points as he made two years and one year ago and that nothing has changed?

Sir Bernard Braine: Yes. I am grateful to my hon. Friend. I shall come to that in a moment.
Thus, to maintain its present level of services, Essex county council must increase its current year's spending from £500 million to £548 million. The increase is due mainly to commitments arising from 1985–86—inflation, including index-linked pay awards for police and firemen, provision for teachers' pay and restructuring and allowing for underprovision for pay awards in 1985–86. The RSG announced by my right hon. Friend the Secretary of State on 18 December 1985 means that to meet that increase our county rates will have to increase by 18 per cent. and grant would go down from £132 million to £115 million.
The Government have set the Essex GRE at £552·77 million, which is their assessment of the cost of providing a standard level of services in our county. To increase expenditure to that level will mean a rate increase of 20·3 per cent., while grant will be reduced to £105 million. That underlines what my hon. Friend the Member for Rochford (Dr. Clark) said a moment ago.
Ever since the system of targets, GREs and penalties was introduced, Essex has consistently made the point that it penalises the low-spending counties. Every year from 1979–80, the RSG has meant a continuing grant loss for Essex. Every year, Essex's expenditure has been far below GRE, the Government's estimate of the cost of providing a standard level of services, and below target. Every year, budgets have been based on standstills and cuts in expenditure. Against that background, how can there be any planning for the future? If there are to be rate increases, such as I have mentioned, how can business and industry in the county plan confidently for the future? This, mark you, Mr. Deputy Speaker, in a county that has been expanding and, as a result of the M11, offers great possibilities for industrial grants. What is now proposed will have an adverse effect on the high hopes for develpment that we held a couple of years ago.


Every year since 1979, the chairman of Essex county council and I on behalf of the county of Essex Members of Parliament have taken a deputation to successive Secretaries of State. Each time we have been told that our circumstances are understood and that if we are patient it will eventually come right. Targets have been abolished, but RSG settlements have cut Essex's grant. We were surely entitled this year to a correction of the unfairness of our position compared with London, but we are worse off than ever before.
I should like to respond to what my hon. Friend the Member for Hayes and Harlington (Mr. Dicks) said and give some idea of the assistance that has been given to us. On 23 January 1984, my right hon. Friend the Member for
Wanstead and Woodford (Mr. Jenkin) said:
I would expect in 1985–86 and thereafter to be able to set targets which take greater account of GREs and thus recognise the efforts which low-spending authorities have made … When I draw up the targets next year I shall take greater account of those authorities which have budgeted carefully and which could not, by any stretch of the imagination, be called high spenders."—[Official Report, 23 January 1984; Vol. 52, c. 642–43.]
On 25 July, he said:
The RSG settlement that I am proposing will be less complex than in past years; it will be fairer to responsible, low-spending authorities; it will maintain pressure on higher-spending authorities to find savings; and it will place firm control on the most extravagant authorities. If local government responds sensibly, average rate increases next year should be in low single figures."—[Official Report, 25 July 1985; Vol. 83, c. 1317.]
Maybe, but not in Essex.
On 16 January 1985, my right hon. Friend's successor, who inherited these assurances, said:
Thus, low-spending authorities will benefit from rate capping. For authorities which budget in the coming year, 1985–86, to spend at or below both target and GREA, targets for the following year, 1986–87, will take account of those further savings to be achieved from rate capping the highest spenders. To answer my hon. Friend's intervention, these low-spenders' targets in 1986–87 will therefore be both more favourable than they would have been but for rate capping, and more favourable than for authorities which budget this year to spend above either target or GREA ."—[Official Report, 16 January 1985; Vol. 71, c. 417.]
My right hon. Friend the Member for Wanstead and Woodford, on 25 July 1985, went on to say:
I can certainly give him the assurance that low-spending authorities, spending below or close to the GRE will, on average, stand to gain grant, but of course will continue to face grant pressures against increased spending."—[Official Report, 25 July 1985; Vol. 83, c. 1320.]
Not in Essex, which has been a low-spending authority for a long time. Its budget has always been below GRE. It is the very type of authority that successive Secretaries of State have said need helping once a new system of grant is introduced.
In 1985–86, the Essex GRE was £524 million. The county budget was well below that at £500 million and the grant received was £132 million. For 1986–87, the GRE is £552 million. That is an increase of 5·5 per cent., to include the extra money that is required just to stand still, to keep pace with inflation and to pay increased wages. Under the new grant system, if Essex contemplated doing no more than increasing its budget by a similar 5·5 per cent. and spending £524 million, what would be its grant from the Government? Surely, one could confidently expect the grant would be similarly increased from last year in accordance with the promises that the Government

had given to authorities like Essex to provide a fairer settlement. Not at all. I am assured that, on those figures, if Essex was to spend £524 million and no more against its GRE figure of £552 million, its grant would be no less than £21 million below that of last year.
My hon. Friend the Minister for Environment, Countryside and Local Government was told yesterday by representatives of the three parties on the county council that a budget has not been finally agreed, but for some increases in our expenditure there is no escape. I did not intervene during the Secretary of State's speech, but he seemed to be taking out of account those factors that make for increased expenditure over which local authorities have absolutely no control. For example, there are statutory wage awards for the police and the fire service over and above inflation. Essex can do nothing about this—it is automatic. There is the minimum replacement of buildings that are falling into disrepair. The council can do nothing about that either. Indeed, it would be failing to perform its statutory duty if it did not patch up a few windows and doors and give its buildings a lick of paint. There is not one constituency in Essex where such problems are not being faced.

Mr. Madel: Does my right hon. Friend agree there is also another unavoidable cost? I have in mind debt charges on schools which had to be built, not least in Essex and Bedfordshire, to cater for the overspill from London. That is yet another example of Essex and Bedfordshire, to name but two, helping the inner cities.

Sir Bernard Braine: My hon. Friend is absolutely right. We are now getting down to the nitty gritty. In its wisdom this House passes legislation which puts increased burdens upon local authorities. We do this because we consider it to be right. Take, for example, the provision of increased residential care which the care in the community programme requires. As my hon. Friend the Member for Harwich (Sir J. Ridsdale) will testify, Essex has a high proportion of elderly people, and that is placing an increasing burden upon the local authority. We cannot escape that burden because Parliament expects us to respond to the need.

Sir Julian Ridsdale: Is my right hon. Friend aware that the lower income groups will be badly affected by this settlement? In my constituency, we are putting burdens on the lower income group which it cannot afford. Those burdens should be borne by the taxpayer, not by the ratepayer. Over many years in the House I have said that and asked for reforms. Alas, they have not come about.

Sir Bernard Braine: My hon. Friend is absolutely right about this hit and miss system. He has been a Member of this House for many years and is a doughty champion of the elderly in our county. I am sure that is well recognised. The effect of all this on a county like ours, with an expanding population, an increasing number of retired people and an increasing need for services, is devastating. Perhaps I may adapt a phrase associated with our county's most distinguished parliamentarian, "Up with this unfairness we in Essex will not put."

Mr. Peter Pike: My hon. Friend the Member for Preston (Mr. Thorne) referred to some of the difficulties facing Lancashire, and I fully endorse his comments.


I listened to the right hon. Member for Castle Point (Sir B. Braine) and to the hon. Member for Tiverton (Mr. Maxwell-Hyslop). It is remarkable that time after time when we debate the RSG settlement they criticise the Government, but when it comes to the vote very few Government Members vote with us. They will come back in a year's time and hear the Government again say, "We believe we have got it right this time. We will still pursue Conservative party policies." They will not solve the problems facing local government.
The front page of Thursday's Lancashire Evening Telegraph carried an article warning of big rate rises. The article tried to show the problems that will face Lancashire. My hon. Friend the Member for Preston highlighted those problems when he spoke about the type of rate increases that Lancashire will have to face in order to stand still, purely allowing for inflation and a rise in costs.
In its budget, Lancashire works on the basis of a 6 per cent. rise in wages and a 5 per cent. rise in prices. Those are not unreasonable figures on which to base an estimate. In opening the debate the Secretary of State referred to the manual workers' settlement and said that the settlement reached in November last year of 8·2 per cent. was wrong and a bad settlement, and that local government should carry the burden for anything over 3·5 per cent. He failed to say that that settlement was particularly aimed at the lowest paid workers in local government. It was not a flat rate settlement which gave all workers an 8·2 per cent. increase, because it gave a greater pay increase to those at the lower end of council service. We have to accept that many people employed in local government and in public service as a whole are paid extremely low wages. It is time we did something to ensure that they have reasonable and fair wages. The RSG settlement should take those points into account.

Mr. Barry Porter: Will the hon. Gentleman accept that in practice there will be an extra £400 million to be recycled to local authorities as a result of some of the spending decisions by local councils? Would it not be helpful if the Government would at least determine a minimum amount from that £400 million which local authorities could take into account in setting their rates? Unless that figure is given, we will get ridiculous rate suggestions. If the Government could give an indication of a minimum amount from the £400 million, it might at least persuade me not to vote against the Government.

Mr. Pike: I think that the hon. Gentleman has been slightly misled by what the Secretary of State floated in his speech. He floated that £400 million in his speech without anything to guarantee it. It was an offer without any evidence to prove that it would be carried out. The Secretary of State did that purely to confuse some of the doubters on the Government Back Benches and to persuade them not to go into the Lobby and vote with the Opposition, but to abstain or to vote in support of the Government.

Mr. Tony Banks: My hon. Friend has made a valuable point. Because of the way in which the rate support grant settlement was ordered this year, it is likely that those previously alleged high-spending Labour local authorities

will be low-spending authorities in terms of the Government's calculations. Therefore, they will not attract a penalty and there will not be a £400 million kitty.

Mr. Deputy Speaker: May I appeal to hon. Members for brevity and remind them that many interventions make long speeches even longer and prevent other Members from being called?

Mr. Pike: The point made by my hon. Friend the Member for Newham, North-West (Mr. Banks) is correct and important.
The hon. Member for Lancaster (Mrs. Kellett-Bowman) spoke about the problems of Lancashire county council. Her intervention was totally misleading and needs to be taken in perspective, having regard to the situation in Lancashire. The RSG settlement that the Government are proposing will by itself mean that Lancashire will be faced with a 13p increase. When Labour took control of Lancashire county council in 1981, it had to put right many years of neglect.
The cash target system on which we will operate until the changes now proposed take place was based on a low spending year when the Conservatives were in control. Because of the arbitrary date on which the cash target was based, many councils were placed in difficulties. All along, Lancashire has been spending less than its grant-related expenditure assessment. If it had spent up to its grant-related expenditure assessment, it would have been penalised.
Most people in local government now see the Government moving towards a point where the grant-related expenditure assessment is replacing the target. The Government are saying that there cannot be exemptions for councils spending up to the grant-related expenditure assessment. Several hon. Members intervened when the Secretary of State made this point, and he replied forcefully that it would cost the Government over £1 billion if they were to make that exemption. The Secretary of State was misleading the House, because he was making the assumption that every local authority now spending below its grant-related expenditure assessment would spend up to that figure. His argument was questionable and needs to be put to the test. Even if it were true and every authority spent up to that amount—if the Government want to base the system on grant-related expenditure assessment—how could they accuse those authorities of being profligate? It would be nonsense to do so. This proves that the Government have always had a system based on something which they cannot justify and prove.
Lancashire needs to spend an extra £44 million over the next five years to put its schools into good order. Two schools in my constituency are almost not suitable for use. More than half of Burnley Wood school has been secured because it had to be quarantined as a result of dry rot. Another primary school, Stonyholme, is in a similar condition. I shall visit it on Friday to look at its state.
Lancashire county council has not been able to provide sufficient old people's homes to meet needs. It has not been able to paint and repair them, yet the Government have failed to recognise that expenditure on maintenance provided at the time that it is needed often saves more in the end. If the council had been able to repair the Burnley Wood school when it first needed it, the cost woulc have been £150,000. On the last estimate, the cost was


£399,000. I looked at the school only a fortnight ago, and I think that the cost of repair would be £500,000. The county may have to demolish that school and build another.
Another example of where the council is considering saving money is the pulveriser in Burnley, which serves the whole of north-east Lancashire, not just the council area. The county council is considering stopping the use of that waste disposal unit, taking the waste as it comes off the waste wagons and disposing of it on an infill site. That would be a retrograde step. Although that measure is designed to save the county council money, it will cost the borough council an additional £140,000. That will be almost equal to a 2p additional rate.
Because of the changes in RSG, Burnley will need a 12p rate increase—a 25 per cent. increase on top of the existing 48p rate—just to maintain its .position. Burnley is a deprived area which is designated under the inner urban areas programme. It is, of course, not exempt from penalties imposed by the Government with respect to expenditure arising from the urban programme. The council does not have the money needed to improve housing or to give grants. Because it cannot give grants, people cannot buy empty houses. Houses become derelict and, in the long run, the council has to demolish them, thereby creating greater expense for the authority and for the Government.
The Government always fail to recognise that capital expenditure by local authorities has revenue implications. Burnley's 25 per cent. rate increase to maintain a standstill position is after the safety net in this year's proposal, but we do not know what will happen in future years. What do the Government propose that Burnley should do? Should we stop improving our houses? Should we stop our capital programme? Should we close the recreational centre? Should we make massive cuts and impose
This RSG settlement has implications for section 137 of the Local Government Act 1972. Under that section, local authorities are empowered to spend for the benefit of their inhabitants, where they have no other legal powers to do so, up to the equivalent of a 2p rate. As a result of the RSG proposals, the grant inclusive penny rate product is reduced. This reduces the amount that local authorities can spend under section 137. Most of the money spent under section 137 is used for worthy schemes. Because of the proposed changes, many local authorities will not have sufficient money to meet their commitments. The abolition of the GLC and the metropolitan counties will result in some of the money that could be used to the benefit of the people in those areas being lost.
The Government should undertake to maintain the present position, at least until after the Widdicombe inquiry has dealt with this issue. Burnley will suffer a 38 per cent. reduction under this measure. This year, the council could spend £262,000 under this heading, but the amount will fall to £163,000 next year. Burnley's reduction of 38 per cent. is by no means the highest in Britain.
I could go into great detail about how local authorities use section 137 money, but suffice it to say that the two main purposes in Burnley are attracting jobs and industry and helping voluntary organisations. They are both worthy objectives, but many local authorities like Burnley will not be able to fulfil them. The Government's proposals are

wrong. It is time that they put the rate situation right once and for all and enabled local authorities to get on with the job for which they were elected.

Mr. Charles Morrison: I am glad that my hon. Friend the Member for Burnley (Mr. Pike) mentioned capital investment because not only does capital investment now give rise to revenue expenditure later, but in recent years the pressure imposed on my county by inadequate RSG has meant that whereas, a few years ago, the county financed up to £3 million of capital per annum from revenue, the figure now is virtually nil. This means that, after a few years, the county will be paying out as much in increased interest charges as it was paying out in capital through the revenue account only a few years ago.
From a standstill budget, the increase in the Wiltshire county council rate for 1986–87 will be 28 per cent. In the event, a majority alliance/Labour coalition opposed by Conservative councillors has voted for increases in expenditure which bring the true proposed rate increases up to 32·2 per cent. As a result of creative accountancy and calling on balances, it should be possible to pull that figure back to about 26 per cent. If there had been no increases in expenditure, that figure would have been about 22 per cent. Even that level of rate increase is unacceptably high. It is a direct consequence of the RSG proposals.
I am not prepared to support proposals that can only bring about cuts in public services or huge rate increases, or both. Therefore, sadly, I shall vote against the Government. I should like to add that, within the Wiltshire county council budget exercise, the county treasurer has already taken account of the extra grant which was mentioned by my right hon. Friend the Secretary of State. In this year's desperate circumstances, I think that Wiltshire Conservative councillors were right to vote against any increase in expenditure, but reality about the state of provision of services cannot be avoided. Wiltshire is one of the four lowest-spending education authorities. I am, therefore, constantly bombarded by parents, teachers and school governors concerned about the low level of capitation allowances and the poor state of school maintenance. That is understandable, as the new schools of the 1960s have now suffered 20 or more years of wear and tear. Likewise, it is self-evident to the most casual observer that the quality of county roads has deteriorated steadily over the past 10 years.
Personal services, police, fire and other services in Wiltshire are at, or below, the average level of expenditure. Therefore, in no way can it be claimed that Wiltshire county council is, or has been, extravagant. Indeed, the Audit Commission confirms that it is one of the classic low-spending shire counties.
The Government seem to forget that local government exists to provide services. It does not exist simply as a minor or even a major irritant instituted to interrupt and interfere in the otherwise smooth running of the mind of my right hon. Friend the Chancellor of the Exchequer. He appears to forget that, even if local government did not exist, the services would still have to be provided and, given the relative inefficiency of central Government compared with local government, setting aside any other considerations, centrally provided services would almost certainly be more expensive.
The question that ratepayers will wish to ask my right hon. Friend the Chancellor of the Exchequer are


numerous, but I shall draw the attention of the House to a few. For example, if the economy is on course and doing as well as my right hon. Friend claims, why is it that the rate support grant has been cut? Why is it that he believes that our services can be further cut? Why is it that he is adding to inflationary pressures by instituting such huge increases in rates? How on earth can businesses, small or large, prosper in these conditions? What was the reaction of my right hon. Friends the Secretaries of State for Trade and Industry and for Employment to the proposed size of the rate support grant? Did they not put in a good word for an increase in it? What is the point of even talking about tax cuts when any financial benefit that might accrue from them will be exceeded by rate increases?
It is slightly surprising that we have not had a Treasury Minister sitting on the Front Bench for the debate, as the Treasury is the main source of blame in this matter. But the Department of the Environment, too, has to face the wrath of ratepayers. I do not complain about the desire of my right hon. Friend the Secretary of State to give extra help to inner cities, taking account of their problems. However, having done so within the rate support grant, which takes little or no account of the real world, why add insult to the injury felt by shire counties by pretending, as my right hon. Friend the Secretary of State did when making his announcement on 18 December, that rate increases can be similar to last year and, if they are not, it must be because shire counties are run by nincompoops who are led astray by county treasurers putting forward dishonest prospectuses? That said, I was glad to note my right hon. Friend's compliment to councillors today.
The truth is that the rate support grant settlement assumes an increase in total expenditure which, politely, can only be described as a figment of the imagination. Aggregate Exchequer grant is set at only 46·4 per cent.—the sixth successive year in which the grant percentage has fallen. That reduction alone equates to a 7·8p rate nationally. As well as that, shire counties have been given the lowest share of block grant and have suffered the largest year-on-year fall since block grant began. The shift in grant alone implies a 5·7p rate increase.
The figure of £200 million has been mentioned several times in the debate as the amount that is being taken away from counties. I believe that a more accurate figure is £224 million. That is not an insignificant amount of money, but it is relatively small in comparison with some of the talk, at least before Christmas, about what might be available to my right hon. Friend the Chancellor of the Exchequer for tax cuts. At that time we did not realise what my right hon. Friend the Secretary of State for the Environment meant when he told my right hon. Friend the Member for Cambridgeshire, North-East (Mr. Pym) on 18 December:
Low spenders … will get their rewards."—[Official Report, 18 December 1985; Vol. 89, c. 312.]
To cap it all, the penalty system abolished with such a fanfare has been replaced by one with a different name, but which for some counties, and certainly mine, is far more vicious in its effects than its predecessors. What a muddle.
Year after year many of us have experienced doubts and opposition to the system of financing local government and to the treatment of shire counties in particular. Year after year, we have been told first that we are wrong and secondly, in contradiction, that it will be better next year.

Year after year we are let down. We have been again, and therefore there is no alternative but to vote against the Government again tonight.

Mr. John Fraser: When I heard the Secretary of State speak about a Green Paper on rate reform, I felt that I was hearing the first cuckoo of spring. It is a sign that the Government are contemplating the results of the next general election when we start hearing about rating reform. The rating dance of the seven veils has begun, although one never sees the final veil come off before the election, and the matter is then left.
If the Government are to have a fair reform of the rating system they must look at the basis upon which property is valued. The Government were guilty of the grossest possible act of irresponsibility in putting off the rating reassessment about five years ago. In my constituency, there has been a price explosion in privately owned accommodation, but there are also many estates that are hard to let. One frequently finds that properties changing hands at £100,000 a time have the same rateable value as a flat in a hard-to-let council estate. That cannot be right.
This factor is equally true of commercial properties. There are places that used to be the most popular shopping areas, but which for one reason or another have since declined, possibly because of the decline in purchasing power or because property development has taken place elsewhere and shifted shopping from one part of London to another. Despite that, the high rateable values on shops and commercial premises remain. There are gross injustices between the resources of one borough and another, which are made worse the longer that revaluation is delayed.
It is wrong that for the Government have not been more flexible over what are called disregards. If Governments impose on a local authority additional statutory duties—custodianship is one example, but there are others—it is wrong that the local authority is penalised, as some are, because they have taken up such duties. Equally, it is wrong that for penalty purposes there should not be a disregard under the inner city partnership on those urban aid schemes that are accepted by a local authority when the scheme has become time-expired.
If the Government do not disregard these matters, all that a local authority is doing in supporting 25 per cent. of an inner city partnership scheme is to store up trouble and penalties when the scheme becomes time-expired, even if it has been a success. After all, the inner city scheme is partly intended to experiment with projects in the community that can become a permanent feature in the life of that community. I hope that the Government will look at this point again.
The right hon. Member for Castle Point (Sir B. Braille) spoke about the irreducible level of services and the necessity to curb cuts. I felt that some of his phraseology was similar to that used by the leader of my local council, Councillor Ted Knight. I say that without diparagement to either gentleman. The only difference between their logic is that in Lambeth we expect the rate capping exercise to result in a substantial reduction in the rates that are charged. This council has been called "the lunatic Left" and has been accused of being irresponsible. The result of the settlement means that we shall be paying less in rates in the coming year while Essex will be paying more in rates.


In case the House thinks that the Government have deliberately shifted resources in favour of the inner cities, may I point out that that is not so. The shire counties are suffering from, and to some extent the London boroughs are benefiting from, the Government's incompetence over the dissolution of the Greater London council. When the GLC's expenditure approached £1 billion a year it found that it received no rate support grant and that it was being penalised heavily for its activities.
The GLC's expenditure is to be redistributed among the boroughs, residual bodies and joint boards, so the Government cannot logically impose the same penalties or the same holdback of rate support grant upon the individual London boroughs as they imposed upon the Greater London council. Almost by accident, therefore, additional money is to be given to the London boroughs. One cannot say that thereby resources are being directed to the inner city boroughs. It is simply the consequence of the Government's incompetence in abolishing the GLC. However, it does not follow that because Lambeth has a lower rate and more resources may be directed to it in terms of rate support grant, anything extra will be done for the inner city boroughs. The Government have pegged the level of expenditure in Lambeth to expenditure in the current year. This means that there will be a cut in real terms. The level of expenditure is pegged in cash terms, not in real terms.
We are faced with the extraordinary phenomenon that at first sight it seems that the shift in resources to the inner city boroughs means that more will be done there. However, that is an optical illusion. It is like one of those drawings in which one thinks that there is a box above the surface, but when one looks at it more closely one finds that there is a hole below the surface. Although, therefore, we shall receive additional resources we shall do less. We shall suffer a cut of 5 per cent. on the rate-capping exercise because of the way in which our expenditure has been fixed. We shall have less money to spend on voluntary organisations. Many of them will be gravely disappointed after the abolition of the GLC.
We shall have less money to spend upon the maintenance of local authority properties, yet a great deal of money needs to be spent upon them. This goes hand in hand with a cut of £5 million in the housing investment programme for Lambeth. This is happening at a time when we need to spend more money upon improving, repairing and upgrading our council properties. A little more money may be coming our way through the rate support grant, but there will be less expenditure and less activity.
Unemployment is increasing by leaps and bounds. Unemployment in some of the wards in my constituency is running at about 40 per cent. of the insured population. That is a disgracefully high figure. However, the result of this settlement, coupled with rate capping, means that less money will be available for local government services.
At the beginning of last year's rating exercise Lambeth was told, as a rate-capped borough, that its expenditure limit would be £116 million. However, in December 1985, following the issue of a writ by Lambeth council against the Department of the Environment and following also a few telephone calls, the Department of the Environment increased Lambeth's permitted expenditure for 1985–86 from £116 million to £124 million. Lambeth council was libelled and defamed for a year by this Government. The

council was told that it was spending too much and that it was a lunatic council with a high expenditure record. However, without any great fanfare, at the end of the year the permitted expenditure level was raised from £116 million to £124 million, an expenditure level that will set the pattern of expenditure for the next financial year.
My advice to Conservative Members is that they should not be afraid to issue a writ against the Department of the Environment. It does not do any harm. They should not be afraid to keep up the battle throughout the rating year. They may have some success, as we have had in Lambeth.
The majority of Labour councillors in Lambeth are suffering in the High Court because of surcharging by the district auditor, yet all the assumptions that the Government put before them at the beginning of the rating year were disproved towards the end of it by the reassessment of expenditure at £124 million. After a year of incompetence, mismanagement and wrong calculations about expenditure in my borough, the very least that the Government ought to do is to swear an affidavit about their own incompetence and lodge it before a judge in the High Court in order to get rid of the case against Lambeth councillors who, at the end of the day, have been proved to be correct in their assumptions of expenditure levels.

Mr. Michael Carttiss: Not a single Conservative Member has risen to say a good word about the rate support grant settlement for 1986–87. That may be a matter of some amusement to the hon. Member for Newham, North-West (Mr. Banks), but the fact remains that it is a sad day for the Conservative party. There have been repeated assurances by Ministers, and successive Secretaries of State believed that they had carried out those assurances. However, that is not the perception in the shire counties.
A number of right hon. and hon. Members have demonstrated the iniquities of the rate support grant. My right hon. Friend the Secretary of State for the Environment has said, as have previous Secretaries of State, that, to say the least, the rate support grant system is unsatisfactory. My right hon. Friend the Member for Henley (Mr. Heseltine) said it in this House in 1980. He did not carry the Cabinet with him on that occasion, and other Secretaries of State did not carry the Cabinet with them when a new system was produced that would have resulted in equity.
The reaction of the Great Yarmouth borough council has been fairly helpful. I have discussed these matters on many occasions with my hon. Friend the Parliamentary Under-Secretary of State, my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold). I am always grateful for the careful attention that she gives to them. However, my right hon. Friend the Secretary of State, my hon. Friend the Minister for Environment, Countryside and Local Government and my hon. Friend the Parliamentary Under-Secretary of State are victims of this system and of the failure by previous Secretaries of State to persuade the Government that this is a serious matter and that something must be done about it.
It is a fact that when, at the end of July, my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) announced his proposals concerning the major elements of the 1986–87 rate support grant settlement, they were welcomed. The abolition of targets and penalties and the initial settlement for Norfolk seemed to be reasonably


good. The grant-related expenditure for Norfolk of £266 million for 1986–87 showed an increase over the 1985–86 GRE of 5·6 per cent. For shire counties the average increase has been 5·8 per cent. The increase for the metropolitan areas is 8 per cent. and for London it is 9·2 per cent. The overall increase nationally is 7·3 per cent. Norfolk has a long history of strict economy when budgeting and it has every reason tonight to expect as many of its parliamentary representatives as possible to impress upon the Government, as have other right hon. and hon. Members, that enough is enough.
I was the deputy leader of Norfolk county council when the last Labour Government were in office. Before this Government came to office with their determined effort to restrain public expenditure, Norfolk county council had already adopted a stringent approach towards its expenditure. We were criticised by our Labour opponents for being too ready to respond to the then Labour Government's demands to limit spending. During the past six years, Norfolk county council has continued to exercise a stringent approach to its budget.

Mr. John Powley: With his wealth of local government experience, does my hon. Friend agree that what we have wanted for the past six or seven years has been not a tinkering with the present system, which I believe has been tinkered with, but a major overhaul of the whole concept of the rate support grant to ensure a fairer distribution?

Mr. Carttiss: I agree with my hon. Friend the Member for Norwich, South (Mr. Powley). However, for the time being all that I ask is that the Secretary of State and my right hon. and learned Friends on the Front Bench should carry out the promise of the then Secretary of State, my right hon. Friend the Member for Wanstead and Woodford. On 25 July 1985 he stated:
Norfolk has been a sensible, moderate, low-spending authority—the type of authority that should benefit from my announcement today."—[Official Report, 25 July 1985; Vol. 83, c. 1331.]
Norfolk has not benefited from that announcement.
As a former teacher and former chairman of Norfolk education committee, I was pleased to see my hon. Friend the Under-Secretary of State for Education and Science look in briefly on the debate. Education takes up much of county council expenditure. Inevitably, education is where the demerits of the rate support grant settlement have the worst effect. The settlement hits the people who can least bear the effects of the RSG, such as the children in our schools. I commend the Government Front Bench to consult the Secretary of State for Education and Science on this matter.
Education in Norfolk has a GRE of £157 million. That is the Government's estimate of the money that a local authority, such as Norfolk, should be spending. In fact, the local authority spent only 97·2 per cent. of that amount. A 2 per cent. gap does not sound much, but it represents £4·5 million. With £1 million more devoted to education in Norfolk, we could create a system that would be more acceptable to my constituents. The hon. Member for Newham, North-West complains about the abolition of the GLC, which spends £13 million on supporting lesbians. In Norfolk there has been an unsavoury reaction to that because the result of the RSG is to switch money away from the shire counties to the metropolitan authorities. Nothing grieves me more than to be critical of my right hon. Friend the Secretary of State.
I was delighted to serve for more than 200 hours on the Committee that succeeded in playing its part in the abolition of the metropolitan authorities.

Mr. Simon Hughes: The hon. Gentleman made a great contribution!

Mr. Carttiss: I made the contribution of being present. What little I said was more to the point than all the words of the hon. Gentleman.
The disastrous reorganisation of local government under the administration of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) has much to do with the problems of the shire counties in 1986–87. I was pleased to see my right hon. Friend the Secretary of State play such an effective role in abolishing those metropolitan authorities.
Hon. Members, including the hon. Member for Southwark and Bermondsey (Mr. Hughes), will enjoy the irony of the fact that my enjoyment in undoing the mistakes of previous Conservative Administrations in respect of local government has had to be paid for by my constituents.
On the admission of the Department of Education and Science, Norfolk has been in the forefront of economy-conscious LEAs, notably in school meals and in the removal of surplus school places. A letter from the Department of Education and Science shows that Norfolk has reduced the cost of the school meals service since 1979 by 43 per cent. That is more than double the average saving on the school meals service made by shire counties and it is four times the national average saving. The letter states:
This is an excellent record".
Between 1980 and 1984 Norfolk closed 46 primary schools. That number of closures was not exceeded by any other shire county. About 3,000 surplus secondary school places were removed between 1980 and 1983. For much of that period I was chairman of the education committee.

Mr. Henry Bellingham: Is my hon. Friend aware that, as a result of several commitments made by the Secretary of State during the past two years, I have been campaigning for improvements in the education service in my constituency and for the retention of several primary schools? How can I support the Government tonight and still face the county education officer, the divisional surveyor and the county surveyor?

Mr. Carttiss: Any hon. Member representing Norfolk is in a difficult position, bearing in mind the enormous economies that the county council has had to make, for which Conservative councillors paid a heavy price when they lost their seats in the 1984 election.

Mr. Patrick Thompson: My hon. Friend constantly refers to county councils. Does he agree that district councils are just as important? Norwich city council and Broadland district council are in my constituency. It is easy for me to see the unfairness in the treatment of a low-spending, careful-budgeting district council such as Broadland. What my hon. Friend says applies as much to low-spending district councils as to low-spending county councils.

Mr. Carttiss: The expenditure of a district council is a small part of, for example, sub-committee expenditure in an education authority.
In Norfolk, six secondary schools were closed between 1980 and 1983. Four of those schools were in my


constituency. I reveal those facts to illustrate to the House that no one has been more determined in 19 years service in local government to ensure strict economies in local public spending. I wish that there was the same determination at a national level to achieve the type of cuts that local services have had. My right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) called it a Charlie Chaplin system. Norfolk will have to find £6 million this year to avoid penalty. There must be something wrong with the Department of the Environment's GRE figure of £266 million, because the authority has engaged in heavy cutting. Other Departments have recognised that.
Although my right hon. Friend has abolished targets, the Government's new figures are based on assumed levels of spending. We no longer ask local authorities to worry about targets, but the Government still have in mind a figure for each authority, which they call its assumed level of spending.
I rarely address the House, Mr. Deputy Speaker, and it is most unfortunate that tonight I have almost lost my voice when I am attacking a Government that I admire and respect so much in every other way. It is an illustration of the depth of emotion that I feel when I think that successive Conservative Administrations have repeatedly said that they are willing to recognise and to reward low-spending authorities, yet they are still unable to do so.
In Norfolk, there is a gap of £36 million between the GREA and the assumed level of spending. For every pound spent over that assumed level, Norfolk loses 57p of Government grant. Yet, on last year's system of distributing RSG, the Minister knows that for every pound spent below GRE, grant would have been gained. The problem for a loyal supporter of the Government who is 100 per cent. committed to the aims and objectives of his right hon. and hon. Friends on the Treasury Bench is at what point he says, "I must oppose the Government, not just in words but in deed."
I remind the House that I made my maiden speech on this subject two years ago. I concluded my remarks then by saying that next year's settlement would be better. This year, the average ratepayer in my constituency who owns a house with a rateable value of £175 will pay £5 a week in county council rates. As a result of this rate support grant settlement, he will pay £6 a week. I should be grateful if my right hon. Friend the Secretary of State—in his absence I expressed enormous admiration for him—will accompany me round the villages in my constituency and round Great Yarmouth to explain to each ratepayer in 40 seconds why this has happened to a Conservative-controlled local authority. Socialists and Liberals have never controlled Norfolk county council, and they never will, because I am confident that, recognising the strength of feeling among Conservative Members, the Government will introduce a more equitable system next year.
To encourage my right hon. and hon. Friends, I should tell them that, although I voted with them last year on the understanding that low-spending authorities such as Norfolk would get a better deal this year, that has not been the result of this year's settlement. Therefore, it would be dishonourable, after 19 years in local government service in Norfolk, to do anything other than join the Opposition in their Lobby tonight, confident, however, that the

Government will produce a better system within the next two years to ensure that they will remain in office for a further five years.

Mr. Clive Soley: I never cease to be amazed by the audacity of the Government. They believe that they can fool all the people all the time. During his opening speech the Minister did what I have heard him do on several occasions: he berated local authorities for their high expenditure and he blamed them for the ills of the country's economic condition. Yet he has known for many years that Government public expenditure has been increasing year after year, while local authority expenditure has been forced down. As my hon. Friend the Member for Copeland (Dr. Cunningham) said, the Minister is continuing to tell local authorities. "Do not do as we do, do as we tell you."
To some extent, I sympathise with those who live in the shire counties, because I would be the first to recognise the problem of rural poverty. But I have little sympathy with Conservative Members who represent shire counties because, since 1979, they have given full support to their Government in terms of cutting local authority expenditure. Suddenly the shire county Members discover that they are being hurt. They do not like it, and they complain about it. It is a bit late now. They should have thought of that a few years ago.
The Secretary of State said that his RSG settlement was designed to obtain a balance between rural and inner-city needs. It will not do that at all. Conservative Members and my hon. Friend the Member for Norwood (Mr. Fraser) pointed out that much of what is happening today is a consequence of the abolition of the GLC and the metropolitan counties. Another cause is that the Government have recognised that the crisis in the inner cities is becoming profoundly dangerous to the fabric of society. We have had riots and crime in our inner cities of a nature and intensity that have not been seen in Britain for more than 100 years. That frightened the Government, so after years of cutting expenditure they are trying to direct a little more money back into the inner cities. The message from that, as some Conservative Members recognise, is that if the riots and inner city troubles are sufficiently great, those areas will receive a little extra money. That is the mess that the Government have got themselves into on this issue.
I sat with the Secretary of State throughout the Committee stage of the Local Government Bill. He was always looking forward to the money that he would save through the abolition of the GLC and metropolitan county councils. Now, both he and his hon. Friends are sadder and wiser. They are making no significant savings, and in March and April many good voluntary and part statutory bodies will either lose money dramatically or go to the wall completely because no one will pick up the bill and ensure that they function. That will apply both in inner city areas and outside them.
There is a desperate crisis in inner city areas, and it affects constituencies such as mine. In Hammersmith and Fulham there has been an appalling loss of services, and there is a dire need for expansion of basic services, such as housing. While talking about Hammersmith and Fulham it is right and appropriate for me to say a word about the late hon. Member for Fulham, Mr. Martin Stevens, who died at the untimely and young age of 56.


He and I had strong basic disagreements about political philosophy. However, he spent a great deal of time in his constituency and was frequently seen there taking up people's problems. He will be a loss to the Conservative party, and many people in Fulham will miss him. It is right for the House to pay its respects to him. We knew that we were representing inner city areas with profound problems.
Hammersmith and Fulham council is run by a coalition of Conservative and Liberals who have a strong ideological commitment to privatisation and, above all, to dramatic cuts in public expenditure. We have a housing waiting list of 10,000 people, yet the Government, with the full, active support and encouragement of the Liberal-Tory council, are busy selling eight or nine blocks of flats in Fulham court. In doing so, they are decanting council tenants from those flats, and are even talking about taking eviction powers to remove people who have lived there, often all their lives, from the flats. That is a wholly unacceptable policy, and it does not merely affect those people, but others.
Today I received a not untypical letter from Hammersmith and Fulham council about Mr. and Mrs. Conlon in my constituency. It states:
There is no possibility of a transfer as Mr. and Mrs. Conlon have no transfer points.
In other words, the council and the Government by cutting the housing budget for building, renovation and repairs are creating a housing crisis in our inner cities which makes the underlying problems far worse for people at every level.
Hammersmith and Fulham has the fourth highest public sector rents in London, yet we have the second highest rate of single-parent families, and many people on low incomes. Despite that, we wonder why more and more people get into debt, why their electricity and gas supplies are cut off, and why the rent is unpaid.
The social services were under the control of a Liberal councillor who is now the chairman of finance. During his period as chairman of the social services committee children on the at risk register, which was set up by the Government, were not being supervised by social workers because of cuts. Eventually they were given a social worker, but only after I, the press and others had exerted pressure. The chairman also tried to interfere with court decisions affecting care proceedings which the committee had set in hand, and had to be warned off by the clerk of the court. The director of social services, who was a good one, was driven from his job and the job was left unfilled for more than 18 months. That is how bad the position became.
We shall now see the full results of that. On Wednesday a report will go to the social services committee which is now under a conservative chairman. It will show that under the financing for the next 12 months it will be necessary to decrease the number of nursery places which have existed since 1984 by 13 per cent. The nursery provision is not keeping pace with the projected increase in the number of children aged up to four years.
Eleven of the children on that waiting list are in priority category 2. That means that there is a danger to the child's health and of serious neglect by the parent. However, there is no place for such children in a nursery school. There are another 86 children in priority category 4. It is considered in that category that there is a serious risk to a child's normal development. For example, the parents might be

mentally handicapped or something of that nature. Again there is no possibility in the near future of nursery places for such children. There is a total of 756 children in the top five categories.
There has been a clash between the Government and their own Tory-Liberal council because the council submitted a financial package to the Department of the Environment. The Department rejected that package and the council is now going to have to drop some of its projects as a result.
To cope with that situation the social services committee is proposing, first, to close and sell three children's homes and one home for the elderly, although we all know that the problems of children and the elderly are among the most acute in the area. The social services committee is also proposing to close the student unit. I intend to discover in due course whether that closure will affect training for social workers caring for children on the at risk register. In view of the many recent cases, the last thing we ought to do is cut back on training for social workers. The committee is also to close a luncheon club. That is a measure of the crisis that is hitting the inner cities. The report ends with the words:
The Services most affected will be the Area Teams, the Homes for the Elderly and the Day Nurseries where budgets will not be sufficient to maintain full staffing.
The social services committee also proposes to close Riverpoint hostel. Even The London Standard reported a few days ago that that hostel was taking homeless people not just from the London borough of Hammersmith and Fulham but from all over London and from outside London. Hon. Members may forget that the inner cities have to pick up some of the problems from the outer London and shire areas.
The Riverside studios, the well-known arts theatre in the borough, will have to close because the council is rejecting a grant that was initially put forward by the Arts Council as long as the council was prepared to pay something as well. The Liberal chairman of the social services committee, Councillor Knott, said:
There is no way we are going to fund the Riverside. We are off the hook and do not intend to get back on.
Finally, there is the problem of crime in inner city areas. A week or so ago the Secretary of State for the Home Department boasted of his Downing street seminar. Many of the things in that seminar involving crime prevention cost money. The Secretary of State mentioned 1·3 million houses needing basic improvements in their locks, doors and windows. The rate of grant necessary—which is something in the region of £400 per house or flat for the older properties that need more repairs—represents an overall cost of £500 million. Where will that money come from? Will it come from the shire areas or the inner city areas? Where will the money come from to pay for the caretakers who prevent vandalism and who help clear up graffiti? Where will the money come from for the other social problems that exist in the inner cities and shire areas?
I welcome those Conservative hon. Members who say that they will join Opposition Members in the Lobby tonight. By God, those hon. Members are six years too late. The damage that has been done to the fabric of the country is almost irreversible and will take years to put right. I must tell Conservative Members that it is not an answer simply to shift money from the shires to the inner cities. It must be recognised that at the same time as the


Government are putting a greater burden on the inner cities and a greater burden on the shire areas through rates, they are actually giving more back in tax handouts to the rich than ever before.
Social Trends, the booklet published only a few weeks ago, shows that, without any doubt, the rich in Britain, and particularly the very rich, are getting very much richer and the poor are getting very much poorer. At the same time the low income groups in the inner cities and in the shire counties are having to pick up the bill. That is a recipe for disaster and if Conservative Members will carry their logic to its conclusion they will not only vote against the report tonight, but will make sure that the Minister never tries to get away with it again and reverse the policy.

Mr. Anthony Nelson: It is difficult at this late stage of the debate, and somewhat invidious, to try to encapsulate all the issues that have been raised. It is rather like trying to squeeze a three-year pure science degree course into the space of five minutes. However, as I am charged with the responsibility of speaking for my constituency and on behalf of a number of colleagues who represent west Sussex constituencies, and who are in their places this evening, I shall do my best in a short time to put a few compelling and persuasive facts on the record.
As I said on 18 December, there is a widespread feeling of betrayal in the shire counties following the rate support grant settlement. I feel that there has been a gross breach of faith with statements made by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), the previous Secretary of State for the Environment, and with previously expressed intentions. Time and time again we have been told that the most prudent and lowest spending authorities would be rewarded with fairer allocations, but time and time again our best hopes have been thwarted. On this occasion the time is up and we are prepared no longer to put up with promises of jam tomorrow.
As my hon. Friend the Member for Horsham (Sir P. Hordern) said, the position of the West Sussex county council is especially difficult. The national rate support grant has fallen by about 2·5 per cent., but it has fallen by 11·3 per cent.—from £54·4 million to £48·3 million—for the West Sussex county council. However, it is the lowest spending shire county in the country per head of population. At 141p, it has the lowest rate in the pound in the country. Its expenditure this year is £203·1 million, which is £20 million, or 9·1 per cent., below its grant-related expenditure assessment.
The council is planning next year to spend about 7·5 per cent. more, of which only 0·7 per cent. will be expenditure on real growth in services. The remainder will compensate for the inflation that we are experiencing. It was stated at a meeting today of the county council that the rate increase will be 19 per cent. This is well above the rate of inflation, yet, as I have said, I am talking about the lowest spending authority in the country.
The increase in spending of 0·7 per cent. on services, which amounts to an extra £1·3 million, includes essential expenditure on education to provide more teachers, books and equipment. The authority has managed to keep well below the average county expenditure per head on primary and secondary pupils. It includes expenditure on social services, including more home care and expenditure on the

elderly. These are essential items of expenditure in widespread rural constituencies such as the one which I represent. Last but not least, there will be some modest improvement in the provision for the police to bring the Sussex police authority up to establishment and to meet new legislative requirements.
It was to be hoped that in rate support grant terms Chichester district council would mitigate the position of the county. However, the Chichester district council is faced with a block grant loss of about £200,000, even after reducing spending in volume terms. The rate may rise to 16p, an increase of nearly 20 per cent. on last year, and 45 per cent. over the past three years. If anyone doubts the authority's credentials for prudence, it should be said that it was able to peg its rate at 11p for five years. It is a prudent authority. There have been major reviews of staff and organisation by the county and district councils. When I am written to by the chairman of the district council and told that the council is being penalised persistently by remaining a low-spending authority, I realise that the time has come for me to do more than merely implore my colleagues to come up with a fairer deal. It is clear that the time has come to vote accordingly.
There is widespread concern on both sides of the House about the inequitable distribution of the total pool of rate support grant that is available and about variations year on year. If the total amount of cake for distribution to local authorities has fallen by only 2·5 per cent., there should not be such massive fluctuations in what county councils receive year on year. The circumstances of and the demands upon local authorities do not change so radically from year to year, and yet there have to be exaggerated changes to our rate setting because increases in expenditure have a disproportionate impact on the rates that have to be levied.
I consider that my right hon. Friend the Secretary of State could have done more to keep faith with the stated intention of looking after the lowest spending authorities more fairly, possibly by having a graduated scale, which would mean that authorities whose expenditure proved to be well below their grant-related expenditure assessment would be able to benefit from redistribution of close ending to a greater extent and would be able to spend nearer to the level of grant-related expenditure without having to incur such large and increasing reductions in their grants. It does seem inequitable to me.
I very much regret my decision, for it is one that nobody takes lightly, not least myself, having supported the Government consistently during my 11 years in the House. I know that my right hon. Friends the Members for Shoreham (Mr. Luce) and for Worthing (Mr. Higgins), and my hon Friends the Members for Horsham, for Crawley (Mr. Soames) and for Arundel (Mr. Marshall), are with me in the Chamber tonight, and that some of us will find it difficult to support the Government. I for my part will be voting against these reports. I do so in the firm conviction that we must stand up for the interests of our constituents. A shot must be fired across the bows of the Government if we are to have a fairer solution next year.

Mr. Simon Hughes: What a score: for the Government, 1; against 16—and half of those from their own Benches. The only speech so far in favour of these reports has been that of the Secretary of State for the Environment.


This is the report that the right hon. Member for Castle Point (Sir B. Braine) reminded us follows the promise given in the House on 25 July 1985 by the right hon. Gentleman's predecessor, the right hon. Member for Wanstead and Woodford (Mr. Jenkin). This is what we were told we would see:
The RSG settlement that I am proposing will be less complex than in past years; it will be fairer to responsible, low-spending authorities; it will maintain pressure on higher spending authorities to find savings".
And the killer line:
If local government responds sensibly, average rate increases next year should be in low single figures."—[Official Report, 25 July 1985; Vol. 83, c. 1317.]
What is the view of the experts? The Association of County Councils has written to every hon. Member. It takes, firstly, the unprecedented step of asking all hon. Members to vote against the Government's report and to request the Government to produce revised proposals which are not as damaging as those contained in the present report. Secondly, it says that the Government should be asked to make it clear that for the first time ever in local government finance history the shires are being asked to pay for the cities to such a large extent. It also asks that the Government should make it clear that this is
a shift in policy and that they should not
continue to maintain that low rate rises in the shire counties are still possible when the shift in grant alone requires a 5·7p rate increase.
The hon. Member for Chichester (Mr. Nelson), speaking for a Conservative-controlled authority, has just told us that in his authority, which is one of the traditionally low spenders, the figure is 19 per cent. So there has been no addition to make a political point, an accusation which might be levelled at other authorities. That is the reality, and that is what the Association of County Councils has predicted from the moment the announcement was made in December.
Thirdly, as the association has said, what is clear above all is that, instead of a simple system, this year's rate support grant settlement is by far the most complex there has ever been. It
is well beyond the grasp of elected members and most officers to understand exactly why their authorities have gained or lost money.
The litany that we have heard from the hon. Members on the Government Benches has been what can only be described as devastating. For the Secretary of State to think that his first announcement of rate support grant is a success would be a travesty of the truth. The right hon. Member for Cambridgeshire, South-East (Mr. Pym) said that the Government's machine was out of control: it will produce unacceptable rate rises, it is unfair, it penalises authorities, it is in breach of undertakings and it is a contradiction in policy terms. The hon. Member for Eastleigh (Sir D. Price) said that the reports were bad news for the counties and assumed no element of real growth. The right hon. Member for Chesham and Amersham (Sir I. Gilmour) said that, in economic terms, this was sheer moonshine and that Ministers would not do themselves what they were asking the counties to do.
From Devon the hon. Member for Tiverton (Mr. Maxwell-Hyslop) said that this was madness, wholly deficient of logic or reason. From Essex the right hon. Member for Castle Point said that there is no justice. From Wiltshire the hon. Member for Devizes (Mr. Morrison) said that it is a muddle and that we shall either have cuts or huge increases, or both.
Two other devastating points have been made. The right hon. Member for Castle Point said that for six years he and his colleagues had been banging on the doors of the Government to try to get them to change the system. The only conclusion that could be drawn was that instead of there being any sign of a listening Government the Government had been stone deaf to their friends as well as their opponents on the question of need.
The other devastating criticism was from the hon. Member for Devizes. In Wiltshire, where there is an authority under alliance control, the Government appear to have forgotten the principle that local government exists to provide services and services need money. That money has to come, at least in part, from the Government and from the Government's system as it is imposed on the ratepayers and the county councils.
In one of his rare interventions the hon. Member for Great Yarmouth (Mr. Carttiss) said, not surprisingly, that enough is enough and that it is a sad day for the Conservative party. The hon. Gentleman is living proof of the Government's failures because he was a county councillor in Norfolk until his defeat by the alliance in May.
The strongest words came from the hon. Member for Chichester, although he may not have intended them to be stronger than those of his colleagues. He said that there has been a gross breach of faith; a betrayal of what Conservative Members have said.
There have been many interventions from other Conservative Members who have made it clear that if they do what they say, if they are to practise what they preach, they will come into the Lobby with the alliance and the Labour parties tonight. We challenge them to do so because power lies in the hands of Conservative Members. If they do not defeat the report, as they could, the rate increases of 20 per cent., 23 per cent., 26 per cent., 29 per cent., or 32 per cent. that will take place in shire counties throughout England in April and May this year will be their fault. They will not be the fault of the new incoming councils, largely alliance, now that the blue tide has rolled back from over the counties of England. They will not be the fault of the councils that have inherited often a low-spending budget with, as many Conservative Members have admitted, often substantially inadequate provision in school buildings, education, road building, social services and the like. Those increases will be the fault of Conservative Members who will have supported their Government and allowed them yet again to get away with a system that is grossly inequitable.

Mr. Powley: rose—

Mr. Hughes: No, I shall not give way. The hon. Gentleman has already intervened.
The remedy lies in the hands of the House tonight. The Secretary of State has said that next week we shall have the latest Green Paper. If the Secretary of State were a man of such vision, clarity of thought and understanding, he could have brought forward a reform. He could have ensured that what was proposed could have been done by now. He could have brought in a new system and he could have been fair to the inner cities as well as to the shire counties.
But we know the electoral realities. We know that two years ago there was a massive protest about the system from the Secretary of State's right hon. and hon. Friends.


So a year ago the Government eased the burden a bit. They suggested that things would get better. Why then? Because county elections were just around the corner. The elections have happened and the Government realise that this year the electoral test is elsewhere, above all in London. So what have they done? They are making the shires, which do not have elections, pay for London, which does.
There would not have been this massive extra cost without the abolition of the GLC and the metropolitan counties. There would not have been all the transitional costs that the boroughs have to bear, that the Greater London council used to bear. The figures bear that out. Even with the compensation for boroughs there will still be a deficit. In my borough of Southwark there will be a deficit of about £6 million on the cost of transition. Even with the manipulation of the residuary body, its budget and, as the hon. Member for Copeland (Dr. Cunningham) pointed out, the variations, which mean that it does not have capital controls while everybody else does, there would have been a discrepancy.
The Government caused the bills that are now being charged to the shires to pay for what they believe will be electoral success in London in May. However, that will be misspent, as it was in 1985. They spent to buy the votes of the shires last year but they lost. They will spend to buy the votes in the boroughs and the districts this year and that will be lost, too.
The Sunday Times recently described today's events as the "great electoral see-saw". It has opened the system that the Government have sustained for six years to gross manipulation by the Secretary of State, the Cabinet and the Prime Minister. The results of that manipulation do not make their supporters happy. I say to the Government, when the whole world, their own supporters, the Audit Commission and the Public Accounts Committee are saying that the system will not do, why not take away the reports and produce a Green Paper next week? If the Government are really concerned about doing something to reform local government finance and to ensure that people pay according to ability for the services according to need, they still have time to do it. They still have time to come up with something that will be acceptable. There would not then be a rebellion on the Government Back Benches.
The case has been proven. The electors have been betrayed and the shires have been deserted. The Government should be ashamed. Their economic management is a disgrace. It is up to the Tory Members to decide whether they share that responsibility or refuse to take it. We shall see who is on the side of the ratepayers. The alliance is on the side of the ratepayers and it will continue to fight for local government and the services that ratepayers need.

Mr. Douglas Hogg: We are dealing with an extremely complex system of reports. I acquit the Government of introducing a complicated system of calculation in order to make parliamentary scrutiny of their measures more difficult. I do not think that it was their intention to introduce an extremely complicated report, but one of the consequences of our difficulty in

understanding the precise nature of the calculations and considerations built into it is that it makes parliamentary scrutiny of these matters exceptionally difficult.
There are, however, at least three aspects of the policy which are easy to detect and upon which we should comment. The policy of squeezing local government spending is continuing, and this has two aspects. The Government are assuming that the 1986–87 expenditure by local authorities will increase by only 3·4 per cent., and the Government's contribution to local government expenditure, at 46·4 per cent., is, I think. the lowest ever. It is certainly lower than in 1985–86, when it stood at 487 per cent. Therefore, we see a policy of the Government continuing to squeeze local government spending.
There is a shift in resources from the shire counties to the cities. We are told that that shift is about £220 million. The Association of County Councils tells us that that implies a rate increase in the shire counties of 5·7 per cent. No indulgence is shown to the local authorities which are spending substantially below GREA.
The cumulative effect of the policies that I have just mentioned means that it will be impossible for those local authorities which wish to increase their spending towards the GREA to do so without suffering substantial holdbacks.
I believe that the authorities will not be able to maintain their present level of services without increasing rates by substantially more than the 7·5 or 8 per cent. that was mentioned by my right hon. Friend the Secretary of State in December when he made his statement.
Those are four aspects of policy which I believe the House may well grasp even if, like me, some hon. Members have difficulty in understanding the more arcane aspects of the rate support grant.
Having, as it were, summarised the main features, one might be entitled to express one's anxieties. My first, and it is the central one, is that I believe that the Government are seeking to pursue a number of policies, most of which I support when pursued separately, but which are not inherently compatible one with the other. That is the great difficulty that the Government face.
First, there is the assumption about local government spending. I find it difficult to believe that the Government are entitled to assume that 1986–87 local government expenditure will increase by only 3·4 per cent. over 1985–86 levels, when one bears in mind a rate of inflation of 5·5 per cent., the 6·9 per cent. offer to teachers, and pay awards to the police and firemen which are essentially out of the control of the local authorities. If that spending assumption is too low, the grant is too low, because the matters are inextricably linked. I am worried about the low assumption that the Government have made.
My second point is that I am very much in favour of the broad policy of saying that those who spend money should raise more of it. I entirely agree with the policy of reducing the Exchequer contribution. In principle I do not object to it being limited to 46·4 per cent., but I question whether we can do that at the same time as making unduly low assumptions about local government spending and seeking to transfer about £200 million from the shires to the cities.
That takes me to my next point—the transfer of resources. I am prepared to accept as an assumption that there is a compelling argument in favour of spending more


money in the cities, but what I find difficult to accept is that I and my constituents as shire ratepayers should finance that transfer.
If there is a public need to carry through that policy, it is an Exchequer-taxpayer obligation, and not the obligation of the shire ratepayers. It is wrong in principle for the Government to go to the shire ratepayers and say, "Look, there is a problem in the cities. You finance it." Although the problems of the shires are not so apparent—they do not give rise to riots—and the symptoms are less acute, it is wrong to suppose that rural areas do not have problems. They do. They are just different. Even if I were wrong about that—I do not think that I am—one matter is wholly clear, and that is that the shires do not have the financial latitude that will enable them to lose the kind of assessment about which we are talking without suffering significant problems.
I shall deal swiftly with the subject of Lincolnshire county council. The Government are assuming an increase in spending of 3·4 per cent. over 1985–86. That is a spending level of £201·6 million. For that, Lincolnshire will receive a grant of £101·6 million—0·5 per cent. more than in 1985–86. We have done better than many of the counties represented by my right hon. and hon. Friends, because at least we have not suffered a positive cut under Government spending plans, but it is too low a figure. A grant increase of 0·5 per cent. will not enable authorities to maintain existing services without their being obliged to increase rates by substantially more than the 8 per cent. mentioned by my right hon. Friend the Secretary of State.
There is a twist to this. The county council has planned to increase spending to £210 million, which is an increase of 7·5 per cent. over 1985–86. If that were done, the grant would be cut to £98·6 million, which in cash terms would be 2 per cent. below what the county received in 1985–86.
I hear my right hon. Friend the Secretary of State saying that I am proposing an increase in public spending and I should not do that. I wonder whether that is right. Lincolnshire county council's GREA is £222 million. We are currently planning to spend £210 million. Even if the council's planned expenditure goes through and it spends £210 million, it will still be £12 million below the GREA expenditure. Why should the county council not plan slowly to nudge its expenditure up to GREA? If GREA has any meaning at all—I have come to the conclusion that it has not—it must be intended as a measure of need.
As I have my right hon. Friend under my eye, may I develop the point further. He need not be coy. I am not violent. On this occasion he will have to listen.
We are spending substantially below GREA. Lincolnshire's GREA for 1986–87 is an increase of 6·5 per cent., which contrasts with the average for the shire counties of 5.9 per cent. Why should a county such as Lincolnshire not move gradually towards meeting its GREA? My right hon. Friend the Secretary of State spoke eloquently of public spending and said that his Department had run through a model which showed an increase of £1·1 billion in public spending, but that increase assumed that every authority would try to increase its spending to GREA, and I do not believe that will happen. Local authorities would have to finance the greater proportion of increased spending out of rates. My right hon. Friend should not increase the grant for those authorities spending

under GREA to enable them to increase spending up to GREA, but he should not take grant away. In other words.. I strongly favour the policy of GREA exemption.
Whether one looks at it broadly or narrowly, I believe that the Government have made a mistake—not out of malice or intentionally. What they have tried to do is to pursue a number of policies that are not compatible. The Government must face the fact that more money must be put into local government spending by the Exchequer if moneys are to be spent in the city centres. It is wrong to ask the rural ratepayers to carry the taxpayers' obligation. For that reason, and unless I hear things that I do not expect from the Minister tonight, I shall not support the Government in the Lobby tonight. [Interruption.] If hon. Members will have a little more patience, I shall probably vote against the Government.

Mr. Tony Banks: On a point of order, Mr. Speaker. In the interests of balanced debate, do you think that before we continue you could ascertain whether any Tory Back Bencher supports the Government?

Mrs. Kellett-Bowman: Yes, I do.

Mr. Speaker: Order. That is a helpful comment, but I now call Mr. Benyon.

Mr. W. Benyon: I approach this settlement with a note of desperation because we have been all around this course so many times before.
Two things are utterly wrong with the present system of local government finance. The first is that it is massively redistributive. My right hon. Friend the Secretary of State made that point. Ratepayers in Buckinghamshire have to pay a large increase in rates this year to finance inner cities and deprived areas. I am all for such extra expenditure in those areas, but it should be borne by the taxpayer, not the ratepayer.
The second defect is the fact that the settlement is angled on expenditure, not on the rate precept, and it is the rate precept that is important as people are worried about the rates that they pay.
Of course, I am pleased that the penalty system has been abolished, and it is right that there should be an inducement to spend below GREA. GREA means what it says—it is an assessment of the expenditure needed to finance the needs of a local authority. We can argue about how it is produced, but the principle is good. If an authority spends less than its GREA, because of good management, it should be rewarded. The weakness lies in the fact that the expenditure is concerned with the gross, not the net, figure, yet the net figure determines the rate precept.
The initial estimates of expenditure in Buckinghamshire for the current year are £249 million, with a figure for GREA of £236 million. We have balances that we could use, but we are not allowed to, for the assessment of block grant. We are allowed to use the interest but not the balances themselves. However, those balances have been provided by the ratepayer and the taxpayer and they should be used in these difficult circumstances.
I shall now consider the GREA. It works well for an area where the population is static or falling, but it is hopelessly inadequate for an authority such as mine in whose area the population is growing phenomenally. The


population increase for the whole of England between mid-1979 and mid-1984 was 1·2 per cent., but in Buckinghamshire it was 11 per cent.
The figures used for GREA are always two years out of date, and the effect on Buckinghamshire has been catastrophic. The Audit Commission profiles show that the majority of spending areas in Buckinghamshire are at or below the national average. It is obvious that the new city of Milton Keynes plays an enormous part in that process as it is on a green field site and requires an entirely new infrastructure which must be provided by the local authorities. The county has to provide its share in advance of the population explosion. The old burden payment helped towards that, but it has been stopped for four years. I hope that my right hon. Friend the Secretary of State will reconsider that decision.
Recycling moneys from recalcitrant authorities cannot be the answer, because no treasurer can consider fixing a rate on that basis. Indeed, there is some doubt as to whether the process is legal, so planning on that basis is just not on.
I intervened in the speech of my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) to point out my experience on Friday when I went to three different, modest houses in my constituency and asked the occupants what their rateable value was so that I could calculate the extra rate. In nearly every case it was about £150 on the figures produced to date. I said to the occupants, "Are you prepared to tell me your gross income?" In every case they did, and 2p off income tax would be required to pick up the sort of penalty that they will face unless something is done. Like many hon. Members who represent shire counties that have run a good organisation and kept their house in order and will now find themselves penalised, I am totally unable to support this settlement.

Dr. Oonagh McDonald: I shall detain the House for only a few minutes to complain about the absurd position in which the Government's decision about rates has placed Essex county council. Essex is one of the low-spending authorities. Indeed, hon. Members earlier heard me say that its spending is too low. That is because, especially at my end of the county, social and education services are not adequate to meet the needs of the people I represent. In spite of that, the Government are inflicting further cuts on the county.
Essex county council decided that, in order to meet its present commitments, it would need next year to increase its current spending from £500 million to £548 million. If it does that just to meet its present commitments, the county rates will have to go up by 18 per cent. and the grant which Essex receives will go down from £132 million to £115 million. Even worse than that is the sheer absurdity of the Government's assessment of what Essex should be spending and the consequent reduction in the grant and the increase in rates. The Government's assessment of providing a standard level of services for Essex would mean spending in the next financial year of £552 millon above what Essex already plans to spend. Increasing spending to that level will mean a rate increase of 20 per cent. and the grant will go down to £105 million.
That is nonsense, and the Government have done that to what is largely a Tory county council. I am the only Labour representative on that council. I am astonished that the right hon. Member for Castle Point (Sir B. Braine) is the only Essex Member who has taken part in the debate. Many of the other Essex Members are not even present. That can only mean that they do not care about the cuts being imposed on the services provided by Essex county council and about the rate increases that their constituents can expect to pay in the next financial year.
Essex county council—which is no longer Tory-controlled, but is a hung council on which Labour is one of the dominant forces—would like to provide increased residential and community care for the elderly and the handicapped, especially as a large hospital for the mentally handicapped and mentally disabled will be run down over the next 10 years, releasing 600 patients into the community. They will require warden accommodation.
We should like to improve the schools in Essex, particularly in my constituency, because they are sadly in need of repair, and books and equipment should urgently be provided, especially in educational priority areas. The council also wants to restore the library book fund and to allow children to go to school before their fifth birthday.
Those are the sort of services that Essex wants to provide and that my constituents desperately need. They are also the services that the Government are absolutely determined to cut.

Mr. Michael Shersby: The outcome of the rate support grant for Hillingdon this year is perhaps the most extraordinary in the history of this bizarre affair, because it seems likely that Hillingdon will go out of grant altogether. I think that I can say with confidence that it is the only London borough that will be treated in that way. Although I sympathise with the great difficulties of my hon. Friends from shire counties, I do not think that I heard any hon. Member indicate that his local authority was likely to go out of grant altogether. I hope that my hon. Friend the Minister for Environment, Countryside and Local Government will tell the House why that will happen.
The position is complicated by the transitional cost of the abolition of the GLC and its transferred services and, above all, by the uncertainties that arise from the way in which the expenditure of the London Residuary Body is calculated. That will result in great difficulty for London local authorities, because they do not know how much the LRB will cost or what impact it will have on their financial position. I am, however, grateful for the information that I have received on this topic in the past week or two from my hon. Friend the Minister for Environment, Countryside and Local Government. I hope that he will comment on the possibility of permitting the LRB to operate in a way that will result in the maximum benefit to London ratepayers. I hope that my hon. Friend will also reveal how the LRB will operate in succeeding years. I hope especially that he will guarantee that the proposed reduction this year will take place. I say that because I have not yet made up my mind how I shall vote. Much will depend on the assurances that I receive.
I hope that my hon. Friend will give an assurance that he will permit the LRB to act with all possible flexibility in connection with the application of receipts. Many of my borough's problems stem from the fact that it is a so-called


high-resource authority. I therefore look forward to the publication of the Green Paper in a few days' time. I hope that it will contain a paragraph that recognises that the treatment of high-resource authorities and the equalisation of the process that is applied to them have gone too far.
I hope that my hon. Friend will say something about the incredible situation in the borough of Hove, which many hon. Members have mentioned. I am anxious to learn why Hove is unable to levy any rates at all.
The only good news I have is the example set by my borough councillors. They have not only reduced expenditure on services by the maximum amount that the community can support—a reduction of 14 per cent. in real terms since 1978—but they have reduced manpower, by 2,346 non-manual and manual posts in the past eight years. That reduction has been achieved despite an increase of 107 posts resulting from central Government policies. I hope that my hon. Friend will take account of those figures, if nothing else.

Mr. Dicks: Does my hon. Friend agree that it is a disgrace that, despite the achievements by Hillingdon borough council, during the past three years the grant has fallen from £21·2 million to zero? That is not only a disgrace but an insult to Hillingdon ratepayers. It is an affront to my constituents.

Mr. Shersby: I agree that it places honest, hardworking borough councillors and the officers who serve them in the greatest difficulties in discharging their obligations to the people they represent.
Will my hon. Friend the Minister give me the guarantees for which I have asked on the reduction in the LRB contribution? That is very important to my borough. What is the likely decision next year? Will my hon. Friend say something about the excellent report by the Select Committee on Public Accounts, of which I have the honour to be a member, which has made 21 recommendations to the House for urgent action? Any hon. Member who has not read the report of the PAC, published in November, should do so. It makes the point that, whatever changes Parliament may approve as a result of the Green Paper that we are to see at the end of the month, the system that operates is in such a bad state that urgent action is needed now, in advance of any decisions that may be taken as a result of the Green Paper.
We all know that new taxes such as residence tax will need much discussion and consultation. Therefore, we are unlikely to see legislation enacted in this Parliament. The PAC makes the point that legislation should be enacted as quickly as possible. I ask my hon. Friend the Minister to give some assurances that the Department of the Environment will endeavour to bring forward legislative proposals before the end of this Parliament.

Mr. Bowen Wells: The only issue that the Conservative party was campaigning on before 1979 was that high-spending authorities should be curbed and their spending reduced from the profligate amounts being spent on unnecessary items in local government. Tonight, the House is being asked to award those overspenders, particularly in the inner cities, with additional grants, in some cases to the ludicrous extent of the example of Hove, to which my hon. Friend the Member for Uxbridge (Mr. Shersby) has been referring, and to other cities such as Exeter and Bournemouth.
The settlement is illogical. We are rewarding overspenders and giving extra money to authorities that do not need it. This is brought about by the methodology of the calculation of the grant-related expenditure assessment being used throughout the country. In spite of the many Bills and orders that we have been asked to pass since 1979, a deaf ear has been turned to our pleas that that methodology should be altered.
The principal problem in that methodology is the equation made between high rate income authorities—those with high-rated property—and GREA, which wrongly shows that we have low needs. As a result, over the past seven or eight years, the system has taken away money from low-spending, efficient authorities in the shire counties.
My county of Hertfordshire is the second worst disadvantaged county by this method. It is second only to Bedfordshire, and I am delighted that you managed to find space in the busy programme for me to speak, Mr. Speaker. The basic factor that is wrong in the settlement is that it does not reflect the needs of the authority. The rateable value of a standard house in Hertfordshire is 29 per cent. above the shire county average, but we are to be disadvantaged by the settlement. Hertfordshire has the highest rate bills for a house of standard size and amenities of any of the shire counties— £464 in 1985–86, which is 41 per cent. above the average. That shows how wrong is the methodology.
Average male earnings in Hertfordshire are only 13 per cent. above the average. No recognition has been given by the Government to the problems of high rateable values. Rateable value is a poor measure of the ability to pay rates. This is recognised for London, and if the London discount system were extended to Hertfordshire. we would receive a substantial extra grant. Even if local earnings were used as a measure of the ability to pay, there would still be a significant increase in grant.

Mr. Robert B. Jones: Does my hon. Friend agree with the proposition that although it is right to redistribute wealth away from the more prosperous counties to the less prosperous counties, if Hertfordshire gets only a 13 per cent. rate support grant compared with a national average of 46 per cent. it cannot be truly said that our incomes are four times the national average?

Mr. Wells: That is a useful intervention in that it exhibits the point that I was trying to make to the House, despite its lack of attention. Nobody in Hertfordshire wishes the inner cities to be disadvantaged. We want them to be given additional money. It ought to be given to them not, as so many of my right hon. and hon. Friends have said, from the rates of my taxpayers, but from income tax paid by the whole nation.
The inner cities need to be imaginatively regenerated. However, money ought not to be given to the inner London authorities. They have shown themselves to be completely incapable of spending this money in a way that will regenerate their areas. They have received large sums of money but they have not made adequate or proper use of it to ensure that their areas are regenerated. Therefore, the money that is transferred from the shire counties will not result in the economic development that is so desperately needed in those areas. It is a political misjudgment, therefore, to transfer this money from the shire counties to inner London and to the other inner city


areas. May I remind my right hon. Friend the Secretary of State for the Environment that Abraham Lincoln said that one cannot make the poor richer by making the rich poorer.
I am very grateful that my right hon. Friend and my hon. Friend the Minister for Environment, Countryside and Local Government accept the argument that high rateable values should not be the basis upon which such needs are assessed. However, this system will continue for the next few years until legislation is on the statute book. Had it been introduced in 1980 we should be able to benefit from it now. It will take three years to get legislation on to the statute book. In the meantime I want my right hon. Friend the Secretary of State to give a copper-bottomed undertaking that he will introduce a system that will protect my ratepayers from the depredations of the methodology that is used in grant-related expenditure assessments.
I thank my right hon. Friend the Secretary of State for referring to the grant recycling exercise. He believes that £9 million will come back to Hertfordshire from this exercise, and we are grateful for that. However, even if the Conservative majority gets its way on the county council the rate increase precept will probably fall by no more than 2 per cent. My ratepayers will be faced with a rate demand of between 16 and 20 per cent. A 2 per cent. decrease is welcome, but it does not address the problem.
The Government have made a political misjudgment and I very much regret it. Despite our representations, which were made in good time, I am sad to say that my constituents will suffer further reductions in expenditure on education. That expenditure is vital for curricula development and for repairing the buildings in which the children are being educated. It is needed for the young people in my constituency. They are the future builders of this nation, but they are being disadvantaged by an ill-judged settlement. I have to inform my right hon. Friend the Secretary of State, with great reluctance, that I, too, will join those of my right hon. and hon. Friends who cannot support the Government over the rate support grant report.

Mr. Allen McKay: I wish to put a constituency point to the Minister for Environment, Countryside and Local Government and I hope that he will answer it. I do not intend to go over the ground that has already been covered by other right hon. and hon. Members—[Interruption.]

Mr. Speaker: Order. As the House knows, this debate can continue for a little longer.

Mr. McKay: Only one voice on the Government Benches has been supportive of the Government. If the Government have alienated their supporters, they must have done something really wrong. Their action has shown not only political mismanagement, but political misjudgment. If the Government did not have their huge majority, they would not attempt such action at this time.
The Secretary of State should consider that the mining areas have been affected in a way that no other areas have been affected. Other costs, on top of the £12 million for the abolition of the metropolitan counties, will affect Barnsley council. Barnsley council will lose £1·2 million

because of the way in which the rate support grant operates. In mining areas the rate is paid on production, not on plant. That comes on top of a loss of £316,000 because of the work to rule of the year before. The abolition of the metropolitan counties will cost £12 million, lack of rate support grant for mining areas will mean a loss of £1·2 million, and on top of that will come a loss of £316,000.
I know that the Minister could say that that amount will be equalised the following year, but that is not good enough. The loss occurs this year. Barnsley council faces a rate increase of 29·2 oer cent., which is unbelievable. We do not wish to challenge such a rate because there is 20 per cent. unemployment in the area and we do not wish to cause any more. We ask the Minister to meet the council and to consider its problem favourably. We ask him to state that the equalisation will be not next year, which is too late, but this year. If he would bring forward the payment for that year, he would ease the burden on Barnsley council.

Mr. David Madel: Bedfordshire has been mentioned several times during the debate, so I am glad to have the opportunity to say a few words on behalf of the county. Bedfordshire has been treated badly by this rate support settlement. I shall deal with some of the points that worry the Department of the Environment about the way in which Bedfordshire spends its money.
In the early 1980s Bedfordshire spent above its expenditure target, but so did other counties. That overexpenditure has been steadily reduced by Bedfordshire county council. This year, it is not spending above target.
The growth of spending has been mentioned many times during the debate. An audit profile compiled by the Audit Commission on comparisons of expenditure, taking 1981–82 as the base year and the RPI as 100 that year, shows that Bedfordshire's increase in spending has been below the rate of inflation since that year. Bedfordshire had the highest county precept in England in 1980. However, that has now changed. The range of county precepts is now from 139p to 210p. Bedfordshire is at 161·1p, with something like 10 county councils levying a higher county precept than Bedfordshire.
In terms of the general worries of the Department of the Environment, the increases in rates in Bedfordshire have been 2 per cent., 0 per cent. and 7.3 per cent. during the past three years.
There has been criticism about specific items on which Bedfordshire has spent money. Bedfordshire has a higher than average number of pupils now going through the secondary education system. We have a three-tier education system, which is expensive. However, that system was agreed by a Conservative Government in 1970. When criticisms are made of what Bedfordshire spends on education, it must be accepted that a three-tier system brings with it more spending, especially in terms of debt charges for new schools, on heating and lighting. The sparsity factor is also important. The size and design of schools in the three-tier system were agreed with the Department of Education and Science.
Most importantly, housing development in Bedfordshire went on at a tremendous pace the late 1960s and early 1970s. That was agreed by central Government. It has not only been housing for our own people, but, as


I interupted several times today to say, for a fair share of the London overspill. We have helped an inner city and we are continuing to do so.
On education spending, all that I would say is that at a time when the curriculum is being improved and extended, and when expensive resources are going into schools under the technical and vocational education initiative, which bear continuing revenue costs, we cannot expect Bedfordshire now to change its three-tier education system and go through a tremendous upheaval. It is asking the county to do too much. There may be criticisms of Bedfordshire's education spending, and I agree that there may be room for improvement, but the general trend has been in the right direction.
The second item is highway maintenance. The Department of the Environment gets excited and says that Bedfordshire spends too much on highway maintenance. Is it any wonder, given our geographical position? We have the west to east routes and many roads leading to the east coast ports. We are short of bypasses. Above all, cars and trucks from local industry are generating more vehicles on the roads. My goodness, the Government are glad that we employ the people we do in the car and truck industry in Bedfordshire. The Government should be pleased that Vauxhall, a local company, has signed a two-year wage agreement, which is proof positive of management and unions working together. If the Government want more people to be employed in Bedfordshire and want our local economy to grow, they should not hand us a rate support grant settlement the likes of which we are now debating.
My right hon. Friend the Secretary of State has made seven changes in the method of constructing individual local authority GREAs for 1986–87. Six of those changes have a detrimental effect on Bedforshire's GRE. As a consequence, Bedfordshire's GRE will increase by only 3·4 per cent. in 1986–87, which is less than one half of the national average. Even the shire county average is about 70 per cent. higher, while the next lowest county increase is more than 26 per cent. greater than Bedfordshire's The changes which affect Bedfordshire most unfavourably are those relating to education pre-1981 debt charges and the sparsity factor. Our spending on education, much of which is unavoidable, is a result of central Government policy to allow the population of Bedfordshire to increase quickly.
A close consideration of Bedfordshire's spending and rates policies during the past few years shows a significant movement towards financial prudence and realism as to what business and domestic ratepayers can reasonably be expected to pay. That is due to the strong and sensible Conservative influence at county hall in Bedford. I say "influence" because not since 1981 have Conservatives had an overall majority. Indeed, in 1982, the Opposition parties plunged Bedfordshire into the arena of big spending and financial recklessness by forcing through a supplementary rate, which was subsequently cancelled by the Government.
I have listed the areas where Conservative influence at county hall is helping the ratepayer, helping the Government and helping businesses. But this rate support grant settlement does not help Bedfordshire. Therefore, I cannot possibly support the Government.

Rate Support Grant (England)

Mr. Stephen Ross: I have great sympathy with the hon. Member for Bedfordshire, South-West (Mr. Madel), because his county has come off worst of all the shire counties. The second worst is the Isle of Wight. Under this settlement, expenditure will fall short of maintaining a standstill by £1·4 billion, or nearly 6 per cent. We are told that targets and holdback have been abolished and have been replaced by negative marginal grant rates at any level of expenditure. Clawback, which reconciles the amounts of block grant claimed with the total available, remains a big unknown. Negative marginal grant rate for nearly all authorities tends to depress expenditure in the reasonable authorities, but will probably be ignored in the less reasonable ones. Selective ratecapping becomes institutionalised, if that tendency is fulfilled.
Yet more unsettling are the GREA methodology changes which have been made with a panoply of safety nets and capital gains. In other words, complexity is heaped on complexity. Only 10 councils of 372 in England will have a multiplier of one. The remaining 362 have multipliers to recoup part of their gains or losses from methodology changes. Is that the fair, certain and intelligible system proposed by the former Secretary of State? It is not.
What about grant for Burnham restructuring in 1986–87? Should we believe the August announcement of the Secretary of State for Education and Science that October 1985 was the last date for an agreement, if any grant was to be forthcoming? Or, is the Secretary of State for the Environment still keeping the door open? In any case, what figure are we to assume?
New legislation continues to add expenditure burdens to local government at the same time as its resources are diminishing by Government action. My county was one of the worst losers a year ago from the abolition of TSG to revenue. On top of that, next year it will be the second worst loser among the shire counties from GREA methodology changes. That is at a time when we are suffering from the unknown future of Westland, our largest employer, when Plessey is threatened with a takeover by GEC—it employs 1,350—and when Fairey Marine, one of the other large manufacturers, is for sale. Heaven help the future of employment on the Isle of Wight. I pray every night that it will not be as bad as I fear it will be.
The prospects for local, government are for either a 20 or 25 per cent. precept increase, or for further service reductions, just when my constituents are looking to local government to do something about our desperate plight on the unemployment front. If the island were more prosperous, it might be able to weather these annual hammer blows, but—I hate to say this—it is a deprived, offshore poor relation. Both Conservative and Liberal county council administrations have spent the past 12 years begging the Government to recognise that, and to improve the position. I have led two or three such delegations to various Secretaries of State.
The Transport Act 1985 is almost wholly irrelevant on the island, but going through its statutory motions will add

cost to existing council burdens, both administratively and in the provision of uncommercial service which is at present provided on a cross-subsidisation basis. I make no bones of the fact that we charge people more in the summer to keep our services going in the winter.
The Isle of Wight county council's heavy GREA loss on concessionary fares is especially inopportune at present. Council officers are reaching the stage of punch-drunkenness at the daunting task of meeting statutory obligations with shrinking and wholly inadequate grant resources. It may be better if the county council volunteered to be rate-capped as that seems to be the only way of attracting Government attention at present.

Mr. Neil Thorne: I should like to ask my hon. Friend the Minister two questions. First, I understood my right hon. Friend the Secretary of State to say that the balances of the GLC would be distributed on the basis of population. I am not clear whether that applies both to the revenue and to the capital balances. I trust that it applies to both. If so, I assume that it is the Department's intention to ensure that debts which are attributable to boroughs will be so attributed. About £266 million can then be attributable to boroughs, £134 million to Thamesmead, and only £120 million will be non-attributable. That will be the sum total of what will be distributed between the London boroughs, and will be well covered by the assets of that authority on its demise.
Secondly, will my right hon. Friend give an undertaking that he is prepared to use section 91 of the Local Government Act 1985 to prevent the GLC from leaving the cupboard bare on its demise on 31 March 1986?

Mr. Derek Conway: While we in Shropshire very much welcome the abolition of targets, which we have for some time been led to believe would happen, the problems of grant-related expenditure allocation are still hitting us as much as they have in previous years. We were led to believe that a change in our favour was imminent.
Shropshire has been treated reasonably favourably in terms of growth in GREA. In 1986–87, the Shropshire GREA will be £158,744,000, which represents an increase of 7·6 per cent. over the 1985–86 figure, and compares with 5·8 per cent. for the other shire counties. On the whole, we in Shropshire have been favoured more than we expected, but we are still not happy with the basis of the GREA.
The reason, in part, for Shropshire's advantage over some of the constituencies of my hon. Friends who have spoken is the educational sparsity in the county and the education debt that the county carries. In addition, Shropshire's population grew by 1·1 per cent. in 1986–87, compared with 0·5 per cent. in the other shire counties. While my initial reaction was to feel that Shropshire was being favoured by the Department of the Environment, the fact that we have the Telford development corporation in the county, and the growth of population that that brings, makes it incumbent upon Ministers to ensure that the existing services in our rural areas do not suffer as a result of the Government's effective policy.
A grant-related expenditure assessment based on settlement levels of expenditure means that the gap


between Shropshire's GREA and spending continues to grow. This year that will be about £20·4 million, which will leave Shropshire 12·8 per cent. below our grant-related expenditure and the second highest amongst the shire counties.
The Department of the Environment settlement notification shows that at the Government's preferred level of expenditure Shropshire's spending attracts £71·954 million on an expenditure of £138 million. In comparison with the Government's forecast for Shropshire, that means that we were treated favourably. We were up by 4·1 per cent., when the other shire counties were down by 3·1 per cent. That shows that in percentage and rate poundage terms the Shropshire increase was among the highest for the shire counties.
The effect on Shropshire is that the marginal rate is minus 39·49 per cent., which means a loss of grant for ratepayers of £39·49 for every £100 being spent, bringing Shropshire to the level of spending assessed by the Department of the Environment.
My right hon. Friend's remarks on the transfer of resources to London have enabled me to decide on my course of action in the Lobby tonight. I accept my right hon. Friend's comments on the need to address inner city decay. Those comments will be well met by many of my hon. Friends who may not be in the same Lobby but who share his aspirations for an improvement in the problems that exist in the inner cities. However, to say that he could not pass by on the other side of the street does not mean that that is justification for removing resources from the shire counties to deal with the problems in the cities, particularly in London.
Shire counties are not all rolling hedgerows and Mercedes-Benz estate cars. There are as many problems to be found in some town areas in the shire counties as can be found in the inner city areas. The reallocation of £400 million will be welcome and will be more substantial than the sum available last year. Perhaps the surplus from overspend and penalties will take some of the sting out of the arguments that we have heard today, but the sharing of the block grant, on the Department of the Environment's own figures, remains. The shire counties are down from 46·4 to 43·7 per cent., whereas London is up from 15·2 to 17·5 per cent. For the areas that have exercised financial self-restraint and control in the difficult years, that is more than it is possible to take. More action is needed for inner city regeneration, but that will not be acceptable at the cost of shire county degeneration.

Sir Paul Hawkins: It is not my intention to make a speech. I wish merely to ask a question to avoid interrupting my hon. Friend the Minister for Environment. Countryside and Local Government, who is to reply on behalf of the Government. Can my right hon. Friend the Secretary of State say whether, if he were the treasurer of Norfolk county council, he could advise his council to fix a lower rate in anticipation of the £5·5 million which I understand it is expected, if all goes well, will be received by Norfolk as a result of clawback on rate capping?

Mr. Ralph Howell: Although I represent part of a county in which there is one of the lower spending authorities, I feel that the other side of the coin

should be put to the House. My attack on the Government is based on the fact that they are giving too much money to local government. I am irritated by the Government talking constantly about high spenders and low spenders. In fact, all local authorities are high spenders. I substantiate what I am saying by drawing the attention of the House to the fact that when I became involved in local government in 1959 there were only 2 million local government officers in the United Kingdom. There are now 3 million. What are they doing? They are doing nothing more than that which was done by the 2 million, and they are doing it less well than it was being done in 1959. I am appalled that we have not been able in six years to place greater restraint on local government.
Every viable business that has not been able to expand has had to reduce its labour force considerably in recent years. Many businesses have had to do so by more than 50 per cent. However, in six years the best that we have achieved is a reduction of 4·3 per cent. in local government manpower. The Government have been soft and weak in not controlling local government and local government manpower. They should have exercised more efficient control, and I wish that they would get on with the job quickly.

Mr. Jack Straw: I do not think that local government needs any lecturing about alleged profligacy or overspending by a farmer and a member of Lloyd's. However, that is the sort of speech that we have heard from the hon. Member for Norfolk, North (Mr. Howell). With the exception of the hon. Members for Norfolk, North and Norfolk, South-West (Sir P. Hawkins), who were absent throughout the previos six hours of debate—

Mr. Ralph Howell: On a point, of order, Mr. Speaker. The hon. Member for Blackburn (Mr. Straw) has made an untrue statement. I have not been absent from the Chamber for the whole of the debate.

Hon. Members: Withdraw.

Mr. Straw: rose—

Mr. Howell: rose—

Mr. Speaker: Order. I must accept what the hon. Member for Norfolk, North (Mr. Howell) says.

Mr. Straw: With the exception of the hon. Members for Norfolk, North and Norfolk, South-West, who made two brief speeches at the end of the debate, this debate, like two previous debates on rate support grant, has been characterised by the deafening silence of Conservative Members in support of Government policy. In the debate on 23 January 1984, only one Conservative Member spoke in support of the Government's policy. That was the hon. Member for Lewisham, West (Mr. Maples). In the debate on 19 January 1985 no Members spoke in support of the Government. Today, of 18 Conservative Members who have spoken, only two are in support of the Government. The rest have spoken vitriolically and eloquently against what the Government are seeking to do.
When the new Secretary of State sat down on 18 December 1985, following his statement on this year's rate support grant settlement, he must finally have comprehended that his predecessor's unpopularity was nothing personal—it goes with the job. I do not wish to do the former Secretary of State any injustice. The story—and


I know not whether it be true—is that, when asked recently what he thought about the problems of the present Secretary of State, he said that the situation was all right when he left it.
On the Richter scale, used for measuring the size of the shock waves that every rate support grant settlement produces inside the Tory party, the previous Secretary of State's efforts rated only six or seven, while this first effort of the new Secretary of State most certainly rates nine. Never has a man come to the House so pleased with himself and gone away so forlorn as he did on 18 December. Scarcely a single Conservative Member on that occasion, representing the Tory heartland of the shires, had anything good to say about the settlement.
Some put it in a gentlemanly way, like the hon. Member for Devizes (Mr. Morrison), who described the settlement as "a matter of great regret". The hon. Member for Cambridgeshire, South-West (Sir A. Grant) spoke of "arcane, arithmetical dexterity". The hon. Member for Staffordshire, South (Mr. Cormack) spoke of "gobbledegook and incomprehensibility". The hon. Member for Langbaurgh (Mr. Holt) spoke of
the beginning of the pantomime season".
That master of subtlety, the hon. Member for Hayes and Harlington (Mr. Dicks), simply described the settlement as "disgusting", while the man who will be the next Speaker but three, the hon. Member for Tiverton (Mr. Maxwell-Hyslop), accused the Secretary of State of
deliberately fiddling the GREA formula
and, for good measure, asked how the Secretary of State could acquit himself of the charge of "sheer political cowardice". To that charge, the Secretary of State could only reply:
As for the first question which my hon. Friend asked, I intend to produce a Green Paper after Christmas."—[Official Report, 18 December 1985; Vol. 89, c. 315.]
I hesitate to intrude upon the private grief of the Conservative party or in any way to add to its difficulties, but I say to hon. Members on the Government Benches, whether they are in that tiny, silent minority supporting the Government or in that much larger group of sullen opponents, that the problems faced by the shire counties were both predictable and predicted, and are a direct consequence of the monstrous system of financial control established by this Government who, as we said they would, are now producing gratuitous and random results of the kind so eloquently described by many hon. Members on both sides of the House.
Some hon. Members, understandably seeking justice for their own shire areas,. have claimed that they have suffered because resources have been shifted to inner urban areas. I represent a shire county. So does my hon. Friend the Member for Copeland (Dr. Cunningham). Therefore, we understand the problems. Our shire counties, too, have been hit by this settlement. Lancashire, as my hon. Friend the Member for Burnley (Mr. Pike) spelt out, has suffered like the rest. The Association of County Councils predicts that the effect of this settlement will be a 19·6 per cent. increase in rates.
None of us, however, whatever area we represent, should allow the Secretary of State to divide and rule. I am glad that in this debate one hon. Member after another on the Government Benches, in criticising the Government,

have accepted this point. Hon. Members have accepted the need for more resources to be devoted to the inner cities, but said that Peter should not be robbed to pay Paul.
In the past, as we have spelt out year by year, the inner urban areas have been hit most severely of all by successive rate support grant settlements. The Controller of the Audit Commission, Mr. John Banham, in a speech on 19 November, drew attention to the fact that, even with the much vaunted increase in the cash amount for urban aid, real resources devoted to the most deprived inner city areas have been cut by 20 per cent. under this Government. Therefore, there has been every justification for restoring the resources available to the inner cities.
Indeed, the Association of County Councils, in asking Conservative Members to vote against the settlement, in a letter to all Members of Parliament, generously said that many in local government would not dispute these priorities in favour of inner cities but support them. However, what the association disputes, and what we dispute, is that the money to help the inner cities should come from the shire areas. As the Association of County Councils, Conservative, alliance and Labour Members have said, the additional funds necessary for inner cities should in fairness be provided through the national tax system. As the right hon. Member for Chesham and Amersham (Sir I. Gilmour) said, the suggestion that the shires have had to be hit in order to help the inner cities is an appalling red herring.
This time last year there were three successive debates on local government finance. The first was on the rate support grant settlement and the other two on rate-capping orders. In each of those debates my hon. Friend the Member for Copeland and I sought to explain to an incredulous House that if rate capping worked, it would have exactly the opposite effect to what the Government intended. The Secretary of State, for example, claimed last year—I ask Conservative Members to weigh with care what he said would happen against what has actually happened—that
the more favourable targets which we have been able to give low-spending authorities for 1985–86 have been possible only through the savings which have been achieved in public expenditure terms by rate capping the highest spenders … Thus, low-spending authorities will benefit from rate capping."—[Official Report, 16 January 1985; Vol. 71, c. 416-17]
That was the promise—that rate-capping the highest spenders would produce benefits for the lower spenders.
On the surface that seemed an obvious point. We all work on the basis that Ministers, even in the Department of the Environment, are rational people and are there to help their friends. Some of the Secretary of State's supporters, although sceptical about the claim, none the less thought that they should believe him. But the actual effect of rate capping is the opposite to what the Secretary of State said it would be.
Bringing down spending in rate-capped areas forces up the rates in non-rate-capped areas. That is bizarre. It is mad, but it is true. The system which last year the Secretary of State described as "byzantine in its complexity", and which this year he has made worse, is simply mad.
Let me explain the point further so that there is no dubiety. Nobody should say next year that they were duped this year as they said this year they were duped last year and last year that they were duped the year before.
The rate support grant cake is fixed in advance. Under the Government's system, whether target or penalty or the


new system of target and penalty in another guise called GREA and slope, the more an authority spends, the less it gets; the less an authority spends, the more it gets.
For example, as I shall spell out in a moment, ILEA is accused of being a high spender. It has no rate support grant. Gillingham is a low spender and it is getting more rate support grant than it needs to cover its total expenses, and it could, as the treasurer has said, declare a dividend and a rates holiday for all its electors.
Under rate capping and all the other controls ILEA gets no rate support grant. So badly has ILEA been treated that the Conservative leader of the Opposition on ILEA, Professor David Smith, last Saturday resigned in sadness from that position in the Conservative party, saying that the Government had failed to take a positive approach to the problems of housing, poverty and education. He went on to say that there had been an increase in alienation and confrontation and that all the Government could think about was rate capping. Being a professor, he understands how rate capping not only hits Labour authorities, such as ILEA, but many Conservative authorities represented by Conservative Members. Parenthetically, I would add that resignations become so commonplace in the Conservative party that the excellent news that Professor Smith had resigned from the Inner London education authority was announced only in the pages of The Daily Telegraph.
Under the byzantine, completely crazy system that has been established, an authority spending too much gets nothing whereas Gillingham, Bath and Hove have received so much grant that they are able to declare a dividend. The treasurer of Gillingham said that Gillingham gets the greatest benefit of all. It could levy no rate, increase spending by 20 per cent. and still balance its books on the basis of the Government's 3 per cent. inflation figure although it thought that that was a little unrealistic.
The more an authority spends, the less it gets; the less it spends, the more it gets. That is the rub. As rate capping and other methods act to push down the spending of the disgraceful high-spending authorities such as ILEA or other Labour authorities, they earn more grant. The more that the Secretary of State controls their spending, the more grant they get. That grant is taken from other previously low-spending authorities. I shall return to that later when I explain the disgraceful fraud that the Secretary of State has been trying to perpetrate on Opposition Members and on the House with the document called "Grant Recycling 1986–87".
There are added reasons for the effect of this year's settlement and why the Government are now reaping a whirlwind from their policies. The abolition of the GLC and the metropolitan counties takes place on 1 April—[Interruption.] Hon. Members will cheer less when they add up the balance sheet of the full cost of abolition. Drawing up that balance sheet will take some time. Meanwhile, the Secretary of State, faced with the prospect of district elections in London and the metropolitan areas because the Government could not abolish them this year, is desperate to prove that abolition will not add to the ratepayers' burden. That is another reason why resources have temporarily been shifted to the metropolitan areas and why the Secretary of State and his predecessor imposed draconian controls on the ability and facility of local authorities to spend their own capital resources. Today they set down that the London Residuary Body, the largest non-elected quango in Europe, will not not have

any control over the spending of its capital receipts in order that the full cost of abolition can be obscured from the ratepayer.
When the present system of rate support grant was introduced in 1980, it had some features which, with a fair wind, might have benefited local government. The Public Accounts Committee, in a report referred to by the hon. Member for Uxbridge (Mr. Shersby), was right to say, in paragraph 54, that the
basic structure of the new RSG system was well designed to achieve its originally intended purpose of a more comprehensible, stable and equitable system, based on a more
objective measurement of spending need."
The Public Accounts Committee says that the system as now operated is "seriously defective" and that
it is clearly absurd that counter productive incentives can exist in the grant system and that these must undermine respect for the present system.
That is the third successive independent report that has damned the Government's creation. The previous two included one from the Audit Commission. I hope tonight we will not hear any further distortions by the Minister about what the Audit Commission said about the possibility of improving efficiency in local government. The controller was so outraged by the distortion of the commission's figures of £1 billion savings claimed by the Minister that he has written to the Secretary of State protesting, in the words of the Municipal Journal
at the Minister's use of Commission figures out of context.
It is within the knowledge of the House that the Secretary of State and the Minister are intelligent, sensitive and sensible men. I am generous to a fault. They know that they are having to do the impossible. They daily trade in nonsense and end up pleasing no one, except the hon. Members for Norfolk, North and for Norfolk, South-West. Instead of returning the system to the path of relative stability which it enjoyed when we were in office and—

Sir Paul Hawkins: Did I hear aright? Did the hon. Gentleman mention me as approving the Government's settlement?

Hon. Members: Withdraw.

Mr. Straw: I withdraw. I abjectly apologise for the fact that I may have been mistaken in believing that a longstanding Conservative Member of Parliament may have been supporting his Government. It is a mistake that I shall seek not to make again. When Conservative Members intend in future to speak in support of the Government, will they serve Opposition Members with written notice and ensure that there are ambulances waiting outside so that any of us who have a heart attack from surprise can be cared for across the way?
The Secretary of State and the Minister are intelligent, sensitive and sensible men. They know that they are having to do the impossible. They daily trade in nonsense and end up pleasing no one. Instead of returning to the path of relative stability which the settlement enjoyed when we were in office and when the right hon. Member for Henley (Mr. Heseltine) was in office, what do they do? They promise us even more complexities—another Green Paper and further efforts to redeem the Prime Minister's pledge, now 12 years old, to abolish the domestic rate.
If what I read in the newspapers is true, I can hardly believe our good fortune. Here is proof at last that the Almighty is on our side. If the present mess were not bad


enough, what are we promised? We are promised a poll tax to replace part only of the domestic rate which would make half the population worse off.
If it were done when 'tis done, then 'twere well
If it were done quickly".
But, lacking the confidence of their own proposals, the newspapers now tell us that those great reforms will not be introduced until at least 1990.
With crucial district council elections in May, the Opposition cannot thank the Secretary of State enough for the gratuitous and additional benefits that he is bringing to the Labour party. We, at least, want to keep him warm. It is no wonder that the right hon. Member for Chesham and Amersham described the poll tax as unappetising.
Two years ago, almost to the day, there was a celebrated exchange during the 1984 rate support grant debate between the right hon. Member for Cambridgeshire, South-East (Mr. Pym) and the Minister who was about to reply. Twice the right hon. Gentleman intervened. He was dissatisfied with the first answer and he struck again on behalf of his outraged and low-spending Conservative-controlled Cambridgeshire:
Whatever constraints there may be from 1985–86 and thereafter, will the Minister be fairer to the low-spending authorities than his statement suggests?
The Minister replied,
I can give a categorical answer to that question—yes."—[Official Report, 23 January 1984; Vol. 52, c. 736.]
Last year, the present Secretary of State claimed, to the incredulity of his friends, that the commitment given by his hon. Friend during the debate a year ago had been fulfilled. It had not. It has not, as the right hon. Member for Cambridgeshire, South-East spelt out earlier this afternoon. he claimed that the undertakings given two years ago had been breached.
Low-spending councils were hit last year, and Conservative councillors paid dearly for that duplicity in the shire county elections in May. If Ministers broke that undertaking last year, they have broken it twice this year. They can, in short, no longer be trusted. If hon. members had any vestige of trust in Ministers when they came in to listen to the debate, I hope that their trust has been wholly shattered by the stunt—that is all that it can be described as—put up by the Secretary of State—to spring like a rabbit out of a hat a document entitled "Grant Recycling" published by the Secretary of State late this evening to try to prove to his hon. Friends how much they would benefit from the abolition of target and penalty.
The point that the Secretary of State sought to make was complicated. It was especially complicated because he suggested that all that Conservative Members had to do was to flick through the document, find their authorities and see how much they might get back through increases in rate support grant, in addition to what was notified on 18 December. They are then expected to troop into the Lobby to vote for the Government's proposals—or, at the very least, not to vote against them.
Even were the document accurate, its message for most Conservative shires and shire districts is meagre. A figure of £5 million has been mentioned, but against the budgets of Buckinghamshire and Cambridgeshire of £230 million, that is nothing but a drop in the ocean. It should not be refused, but, but as the right hon. Member for Cambridgeshire, South-East said, it is not likely to make any signifcant difference to the size of probable rate rises.
How much will the districts represented by hon. Members who have spoken today benefit from the Secretary of State's largesse? Castle Point in Essex will benefit by £93,000; Mid-Devon, which includes the constituency of the hon. Member for Tiverton, will have the wonderful sum of £42,000; East Cambridgeshire will receive £63,000; Eastleigh £117,000—on a budget of almost £4 million—Chichester £107,000—again on a budget of almost £4 million. Milton Keynes, which has been run ragged by the Government's policies, will benefit to the tune of £196,000, Devizes by £203,000 and Great Yarmouth by £93,000.
The document contains even more wonderful news for the Tory marginals of Stevenage, Welwyn and Hatfield and Crawley. They will receive absolutely nothing from the Secretary of State's largesse. Neither will some of the safer Tory areas such as Elmbridge, Epsom and Ewell, Bath, Reigate and Chesham and Amersham. Perhaps the Secretary of State decided that the Chiltern district council would receive nothing because it had already given up on the right hon. Member for Chesham and Amersham. But the Secretary of State may believe that other Conservative souls are closer to being saved.
I shall explain to Conservative Members why the document is not worth the paper on which it is printed. First, the Secretary of State pretended that it contained amazing new information about the operation of the rate support grant system. When he announced his intention to abolish targets and penalties, he said that the effect would be that the previous amount that had been held back by the Treasury—which had gone into the Treasury coffers—would in future be available for redistribution among all the shire and metropolitan authorities in England. However, the Secretary of State did not spell out this afternoon how the system would work. At least with the penalty system, because penalty was taken away from an authority and went straight to the Treasury, it was possible to predict the effect of increases in spending without having to take into account the relative spending levels of every other authority in the land. Because this is a closed system, in which the total pool is set, what one authority receives depends critically not only on the absolute level of spending of another authority, but on the relative level of spending of one authority against another. To add to that complexity, it also depends on whether the authority is a high-resource authority, such as Hillingdon, or a low-resource authority.

Mr. Barry Porter: Does it not depend on whether my hon. Friend the Minister, when he replies, says whether local authorities can take into account in setting their budgets the figures contained in that document? For my local authority, that means £2·3 million. If my hon. Friend says that, I probably will not vote against the Government.

Mr. Straw: If that is all that it takes to square the hon. Gentleman, he should not bother to turn up in the Lobby. Local authorities can take into account whatever they choose. The question is whether this document is worth taking into account. I shall explain why it is not.
How much one authority gets depends on what the others do and its resource basis. Where does the information on which the Minister bases these calculations come from? Is it based on an across-the-board assumption about increases in local authority spending? If so, why was


the information given to the House at 7.30 pm today when it has been available in the Department of the Environment for weeks? The Welsh Office had the courtesy to issue exactly the same type of information to Welsh Members of Parliament some weeks ago. Why was it suddenly sprung on us? Was the Secretary of State trying to stunt with the press? Is it true that, although it took two and a half hours for the document to appear in the Library after the Secretary of State's announcement that it would be made available to hon. Members, members of the press were told about it a good deal earlier? Perhaps the Minister will deal with that.
If the information is based on an across-the-board increase, does the Minister agree that local authorities have estimated that £400 million could be available for grant recycling only if budgets rise by 9 per cent. on average? I see the Secretary of State smiling like a Cheshire cat. Is that what the Secretary of State assumes? If not, what is the assumption? I should be happy to give way to him. It is crucial information. It is crucial to how Conservative Members vote tonight. If the information is not based on such crude assumptions, on what assumptions is it based? Local authorities have not made any budget decisions yet, so they and their treasurers are in no position to make any of the calculations in the document. Where do the assumptions come from?
The Government have set a terrible mantrap for the Conservative party by the system of rate capping and financial controls. I said earlier that, if rate capping works, overspending is reduced and lower spenders are hit. The same result arises here. The claims being made about the benefits of grant recycling will be met only if metropolitan authorities overspend more than shire authorities. I see that the Minister agrees with that statement. The possibility of their doing that is very limited. Metropolitan authorities are Labour-controlled and many key metropolitan authorities are now rate capped and their expenditure is controlled.
One of the major factors in the increase of local government spending above Government norms is the likely cost of the settlement of the teachers' pay dispute which will hit Conservative-controlled shire counties disproportionately hard. The metropolitan districts and the London boroughs have elections; the shire counties do not. It is a fact that, when there are elections, other things being equal, rate rises tend to be lower. There is no warrant whatever for Conservative Members putting any faith in this document. It is a bare-faced attempt by Ministers, at the last minute, in their desperation to try to head off a revolt, to try to bribe Conservative-controlled councils with some of their own money.
We oppose the settlement because it still starves hard-pressed authorities of millions of pounds, because it undermines the ability of local communities to help themselves and because it is an affront to democracy. Conservatives should oppose the settlement because of the damage that it is doing to their areas as well. All should join us in the Lobby tonight.

The Minister for Environment, Countryside and Local Government (Mr. William Waldegrave): It is a privilege not often given to the Government spokesman to double support for the Government by the very act of rising to his feet. I thought for a moment that my hon. Friends the Members for Norfolk, South-West (Sir P.

Hawkins) and for Norfolk, North (Mr. Howell) would spoil my record but one of them said that we had not gone far enough and the other was anxious not to be swept into joining my right hon. Friend the Secretary of State and me on this matter, so it is left to us to persuade the House. That is a task which I know is difficult.
We had many powerful speeches from my hon and right hon. Friends. It has been a long debate and perhaps we have had two or three separate debates. First of all we had the transitory interventions from the Labour party, four or five of whose members have looked in from time to time. They shed crocodile tears for the difficulties of the counties, but those counties would be in far greater difficulties if they listened to the local Labour politicians. There would be no low spenders for any of us if the Labour party locally had its way, as I well know from my own shire county of Avon. From time to time they told us how disgracefully small the transfer to the cities was and so on. The Labour party, and its eloquent spokesman the hon. Member for Blackburn (Mr. Straw), who wound up for the Opposition, would have done better if they had left the case in the hands of my right hon. and hon. Friends who believe in it.
The second debate was much more straightforward. It was from my hon. and right hon. Friends arguing with certainty for increased grants in all their areas, in all the areas for which they claim record low spending. The hon. Member for Newham, North-West (Mr. Banks) called that the revolt of the bourgeoisie. That had my hon. Friend the Member for Hayes and Harlington (Mr. Dicks) on his feet to protest at the definition. My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), who was temporarily out of the House at that moment, may also have been on his feet.
There was also a third debate and this was largely a concert of dogs who did not bark in the night. On this occasion my right hon. and hon. Friends did not have the benefit of a brief from the Council for Social Responsibility of the Church of England, for example, welcoming the transfer of resources to the inner cities. We did not hear from many of the city Members who benefited from that. One or two Members on the Opposition side said "more", and the hon. Member for Newham, North-West provided us with a helpful remark by saying that it was a good settlement for London. I was grateful to him for that. It almost broke a record: it was almost a speech in favour of the settlement. My hon. Friend the Member for Uxbridge (Mr. Shersby) made an important point for people in constituencies like his about the London Residuary Body levy. Other hon. Members with constituencies in a similar position to his can compare the situation. The budget of something like £60 million would mean probably less than 2·5 million for Uxbridge for the levy of the London Residuary Body. I hope that will be useful to him.
There was also another debate to which we will return next week and it was led most vigorously, as on other occasions, by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). My hon. Friend the Member for Eastleigh (Sir D. Price) and, I think, my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), and certainly my hon. Friend the Member for Uxbridge, referred quite rightly to the Public Accounts Committee report. They were all seeking fundamental reforms to the whole system. These are not reforms that can be carried through in the context of a rate support grant settlement,


but we shall return to them. When hon. Members see the proposals brought forward by my right hon. Friend, no one will want to accuse him of political cowardice.
I was asked to reply to some particular points and I shall do that before coming to the central debate, in which my right hon. Friend the Member for Castle Point (Sir B. Braine) and other eloquent speakers from the Government side of the House participated. The hon. Member for Copeland (Dr. Cunningham) asked about the use of section 80 of the Local Government Act 1985. He paid us the compliment of saying that this was a complicated matter, and he will not mind if I read from the brief. This section gives the power to the Secretary of State to specify amounts of grant which shall be deemed to have been payable to the new joint authorities and other successor authorities to the GLC and metropolitan county councils. This would be for the purpose of setting safety nets and caps on grant changes as a result of abolition. In the event, my right hon. Friend has dealt with the limitation of grant changes as a result of abolition in a different way, and has determined his base positions for 1986–87 in the same way as for all other nets and caps in the settlements. In so doing he is relying on section 59 of the Local Government, Planning and Land (No. 2) Act 1980. He has not therefore had to rely on section 80 of the 1985 Act, which he regards as a discretionary power. I hope that answers the hon. Gentleman's point.

Dr. Cunningham: I am grateful to the Minister of State for allowing me to intervene, because this is an important point for a large number of authorities. His reply does not answer the question at all. Birmingham city council and other councils have asked the question, which remains valid: how can the Secretary of State make a judgment about this matter, and how can authorities decide whether that judgment is fair when the Secretary of State continues to refuse to publish the figures for this financial year on which the judgment is based?

Mr. Waldegrave: The hon. Gentleman may have misunderstood me. My right hon. Friend the Secretary of State has not used the discretionary power to make the judgment in that way. Perhaps we could continue this fascinating debate on some other occasion, because I believe that hon. Members are not necessarily here to listen to this point.
The hon. Member for Burnley (Mr. Pike) asked about section 137 of the Local Government Act 1972. My hon. Friend the Under-Secretary of State—the hon. Member for Mitcham and Morden (Mrs. Rumbold)—has had meetings with the Association of Metropolitan Authorities about this matter and it remains under consideration.
The hon. Member for Barnsley, West and Penistone (Mr. McKay) made a point about the loss of rate revenue. I am afraid that I cannot meet him on that point, but I well understand the problem. The rateable resources will come back in the subsequent year.
My hon. Friend the Member for Ilford, South (Mr. Thorne) made a point about the distribution of balances, which is very important to outer London boroughs as well. The revenue balances are being distributed on the basis of population.
Let me turn to the powerful speeches of my right hon. and hon. Friends. [Interruption.] I make no apology for comparing those speeches in that way with the speeches

of other hon. Members. The burden of their complaint has been much the same. Even to list them all would waste precious time. The speech by my hon. Friend the Member for Grantham (Mr. Hogg) was especially enjoyable. The speech by right hon. Friend the Member for Castle Point was particularly impressive, as always, and my hon. Friend the Member for Tiverton is never to be ignored. I understand the frustration represented in the speeches by many of my right hon. and hon. Friends, faced as they are with what their local authority officers tell them are inevitably huge rate increases. As is universally the case in such matters, there is another side to this case. It is known to some of my right hon. and hon. Friends, although not all, because they are sometimes on the other side of the argument.
Three crucial variables affect the rating outcome of a local authority—how much grant in total central Government give, how central Government distribute it and how much local authorities choose to spend. A major plank of the Government's policy has been to cut the rate support grant percentage. There is not a big cut this year, but there is a cut. For at least 40 years—it may be nearly 60 years—wherever there has been an RSG percentage cut, higher resource areas lose more in cash than lower resource areas. It is a redistributive system, as my hon. Friend the Member for Milton Keynes (Mr. Benyon) rightly said.
We discussed these matters at the time of the autumn statement. We voted on them. They had the support of all but a handful. In some sense, there is greater consistency in the position of my right hon. Friend the Member for Chesham and Amersham because he did not vote for the level of provision that we put forward, nor for the RSG percentage that went with it. Conservative Members have endorsed the autumn statement. There were few votes against it. Even the Association of County Councils in its letter said that it is not
specifically asking Parliament to restore the block grant and AEG to previous levels".
I remind my right hon. and hon. Friends of exactly what they voted for in the autumn statement. Paragraph 2.34 shows how we proposed to increase provision—what we thought local authorities would be likely to spend. Paragraph 2.35 says that the grant stays the same in cash. I am a classicist. I do not think that one has to be a statistician to know that that shows that there is a percentage cut in RSG. It is not as big as in previous years and it is not as big as when the good Dr. Witteveen, of whom my hon. Friend the Member for Eastbourne (Mr. Gow) is so fond, spoke to the Labour Government. We all voted for that cut. I certainly voted for it. I shall not embarrass any of my colleagues by mentioning all those who voted for it. As in every year, the percentage cut is distributed unequally by the resource equalisation system, in favour of poor areas and away from richer areas. My hon. Friend the Member for Grantham understood this very well. I think it is fair to say that he always argued before in favour of this percentage cut as putting the burden on local authorities. The structure of his speech was right—he has understood the situation.
We come now to how that figure of nearly £12 billion is distributed. First and foremost, we changed the system of distribution in favour of low spenders by abolishing targets—something on which we were congratulated by the PAC—and replaced them with stronger pressures in


the block grant system itself. This gave every low spender a major gain. It was done in response to arguments for it from right hon. and hon. Friends.
We also decided, as we had been asked to by many right hon. and hon. Friends, church leaders and others, to make some provision for what hon. Members on both sides of the House saw as the increasing needs of the inner cities. That has been welcomed today by many hon. Members, such as my right hon. Friend the Member for Castle Point. As the ACC is honest enough to say:
Many in local government would not dispute the Government's priorities but would support them.

Mr. Straw: Read on.

Mr. Waldegrave: I know very well what comes next.
As there was no additional money, and my right hon. and hon. Friends had already voted for the autumn statement, with one or two exceptions, where was the money to come from? Was it to come from the air? This is the inevitable working of the system that has been entrusted to my Department by my right hon. and hon. Friends. It left a situation in which the distributional shifts in the amount of money had been changed. Let us be clear to what we are objecting, and to what we are not objecting. Elements in the redistribution of the system had been moved in favour of the low spenders. The effect of the RSG cut that is central to our policy, and for which the Government have a defensible case in terms of the accountability of local authorities, meant that even for the low spenders, there was a cut in the grant at a likely spending level.

Sir Kenneth Lewis: Does my hon. Friend agree that he is giving to the shire counties with the one hand, but taking away more with the other, and doing it all in aid of the Treasury—because the Treasury wants cuts in the Budget—not recognising that if people have to pay more on their rates, they will not get any advantage from such cuts?

Mr. Waldegrave: It is wrong to try to shuffle off responsibility from my Department on to the Treasury or any other Department. This is a free-standing policy. We believe in the cuts in the RSG percentage because we believe that the entanglement of central with local government is the cause of so many of the woes of local government. We want to put responsibility more firmly on its shoulders and restore accountability. It is one of our central policies, and is the right policy.
The third crucial variable is spending. Actual spending is doubly crucial to rates in low-spending areas this year. We guessed the likely outcome for them in terms of rates by two measures—what would the low spenders do, and what would the Labour and Liberal high spenders do? As we all know, that is crucial to—[Interruption.] Liberals may laugh at the idea of Liberal councils being high-spending, but I point out the example of Wiltshire's budgets.
We had set the councils a real term standstill target in 1985–86, as has been said by several speakers. This year as well, we had to look at what would be the likely outcome against the background of what we had been asking them to do. At no point had we said to the low spenders that they were off the leash and would be allowed to have general expenditure gains, and they could ignore the attempts that our party, across the country, is making to hold back spending. That was never our policy. We told

them that we were trying to develop a system under which, if they held their expenditure steady in real terms, the situation would not be easy. but it would be tolerable for them and their ratepayers. That is against a 3·5 per cent. increase which, more realistically, may be a 4 or 5 per cent. increase. My hon. Friend the Member for Eastleigh said that we had assumed a standstill budget, meaning 3 per cent., 4 per cent. or 5 per cent. That is exactly right. That was the signal that we were asking should be sent to even the low spenders. We do not wish there to be a general increase, in real terms, in spending.

Mr. Robert B. Jones: Will my hon. Friend give way?

Mr. Waldegrave: Many of my right hon. and hon. Friends are popping in at the end of the debate and trying to make speeches. There is no reason why they could not have made speeches earlier, so I am going to make my speech. Virtually every county that has been to see me or my right hon. and hon. Friends specified its likely spending plans well in advance of that sort of standstill. I have to repeat again and again to my right hon. and hon. Friends that we are being shown projected budgets that, with one or two honourable exceptions, show spending increases of 8, 10 or 12 per cent. We gave no pledge to the high spenders, to the low spenders, to this House or to anybody else that we would validate spending increases in real terms of 5 per cent. or more. That was never a part of our plans. How could we possibly have given such a signal without throwing overboard our central economic policy, to which all of my right hon. and hon. Friends are devoted? We should have been excoriated for it. Several of my right hon. and hon. Friends have said that they should have been allowed or encouraged to spend up to the grant-related expenditure assessment.

Mr. James Prior: My hon. Friend has been saying for the last quarter of an hour that because Conservative Members have supported the Government's general economic policy they have got to support this motion. Is that not really an invitation to Conservative Members to vote against the Government more often?

Mr. Waldegrave: I was saying something that was a little more pointed. I was not commenting upon the general support for the Government's economic policy but upon the fact that the figures that made this result inevitable had been put before the House and had been voted on by the House. It is no good saying to Department of the Environment Ministers or to Ministers in any other Department, "We give you the weapons but we do not like the outcome."
The spending of the high spenders is crucial, too. Authorities that overspend on our system this year all contribute to a pool. All of this goes back to local government. I do not disagree with the hon. member for Blackburn about how this pool of money works. He was right when he said that the low spenders will receive the greatest benefit if we take the amazing gamble that those who have been low spenders since 1976, and before, will continue to be relatively low spenders and that Labour authorities and, in some cases, Liberal authorities which have been high spenders, even under the Labour Government, who could not persuade them to reduce their spending, will continue to be relatively high spenders.
May I point out to my hon. Friends the Members for Wirral, South (Mr. Porter) and for Norfolk, South-West


that it would not be imprudent for treasurers to look at local authority spending—I suspect that they have always done this; in fact, I know that in many cases they have always done it—and to take the further figures that my right hon. Friend the Secretary of State placed in the Library and say, "This is likely to be the outcome." The decision must be for them, but it would not be an imprudent decision to take.

Mr. Straw: Before the Minister gets off this point and since he has not yet mentioned the figures circulated by the Secretary of State at 7.30 pm, will he spell out on what assumptions the calculations were made? Why were the figures not made available to hon. Members before the debate in the same manner as his Welsh colleagues made similar figures available to Welsh hon. Members?

Mr. Waldegrave: The assumption in the figures is redistribution if there is a pool of about £400 million—

Mr. Straw: rose—

Mr. Waldegrave: That is the assumption. As the hon. Member says, there is nothing new about that. The hon. Gentleman can take any level that he likes. The assumption is the redistribution of a pool of £400 million.
We recognise that the settlement is tough and that it does not give the green light to expansion of expenditure—even to low-spending authorities. Nationally, we are not yet in a position to do that. We judged in December and we judge now that although the settlement is tough, it is tolerable, especially when the close ending and the new London Residuary Body budget are taken into account.
I beg my right hon. Friend and hon. Friends, who must be tempted to fight the settlement in the interests of their constituents—

Mr. Carttiss: It is not a temptation, it is our duty.

Mr. Waldegrave: To respect our constituents is indeed the duty of all of us. My right hon. and hon. Friends must not fall for the siren songs from the Opposition and get into an unholy alliance with those who do not believe in low spending and who bear our party and the shire councillors nothing but ill will. They seek to validate every high rate increase by blaming it, with the help of my right hon. and hon. Friends, on the Government. I beg my hon. Friends to think carefully, because the outcome will not be, as it never is, as bad as the predictions. I beg my right hon. and hon. Friends, whose misgivings I understand well, to think carefully before joining that unholy rabble in the Lobby tonight.

Question put:—

The House divided: Ayes 301, Noes 230.

Division No. 41]
[11.28 pm


AYES


Adley, Robert
Baker, Nicholas (Dorset N)


Aitken, Jonathan
Baldry, Tony


Alexander, Richard
Banks, Robert (Harrogate)


Alison, Rt Hon Michael
Batiste, Spencer


Ancram, Michael
Bendall, Vivian


Arnold, Tom
Bennett, Rt Hon Sir Frederic


Ashby, David
Best, Keith


Aspinwall, Jack
Bevan, David Gilroy


Atkins, Rt Hon Sir H.
Biffen, Rt Hon John


Atkins, Robert (South Ribble)
Blackburn, John


Atkinson, David (B'm'th E)
Blaker, Rt Hon Sir Peter


Baker, Rt Hon K. (Mole Vall'y)
Bonsor, Sir Nicholas





Bottomley, Peter
Hamilton, Hon A. (Epsom)


Bottomley, Mrs Virginia
Hamilton, Neil (Tatton)


Bowden, Gerald (Dulwich)
Hampson, Dr Keith


Boyson, Dr Rhodes
Hanley, Jeremy


Brandon-Bravo, Martin
Hannam, John


Bright, Graham
Hargreaves, Kenneth


Brinton, Tim
Harris, David


Brittan, Rt Hon Leon
Harvey, Robert


Brooke, Hon Peter
Havers, Rt Hon Sir Michael


Brown, M. (Brigg &amp; Cl'thpes)
Hawksley, Warren


Browne, John
Hayhoe, Rt Hon Barney


Bruinvels, Peter
Hayward, Robert


Bryan, Sir Paul
Heath, Rt Hon Edward


Buchanan-Smith, Rt Hon A.
Heathcoat-Amory, David


Budgen, Nick
Heddle, John


Burt, Alistair
Henderson, Barry


Butcher, John
Heseltine, Rt Hon Michael


Butler, Rt Hon Sir Adam
Hickmet, Richard


Butterfill, John
Hill, James


Carlisle, John (Luton N)
Hirst, Michael


Carlisle, Kenneth (Lincoln)
Holland, Sir Philip (Gedling)


Carlisle, Rt Hon M. (W'ton S)
Holt, Richard


Cash, William
Howard, Michael


Chalker, Mrs Lynda
Howarth, Alan (Stratf'd-on-A)


Channon, Rt Hon Paul
Howarth, Gerald (Cannock)


Chapman, Sydney
Howe, Rt Hon Sir Geoffrey


Chope, Christopher
Howell, Rt Hon D. (G'ldford)


Churchill, W. S.
Howell, Ralph (Norfolk, N)


Clark, Hon A. (Plym'th S'n)
Hubbard-Miles, Peter


Clark, Sir W. (Croydon S)
Hunt, David (Wirral, W)


Clarke, Rt Hon K. (Rushcliffe)
Hunt, John (Ravensbourne)


Clegg, Sir Walter
Hunter, Andrew


Cockeram, Eric
Hurd, Rt Hon Douglas


Colvin, Michael
Irving, Charles


Coombs, Simon
Jackson, Robert


Cope, John
Jenkin, Rt Hon Patrick


Couchman, James
Jessel, Toby


Critchley, Julian
Jones, Gwilym (Cardiff N)


Crouch, David
Jopling, Rt Hon Michael


Currie, Mrs Edwina
Joseph, Rt Hon Sir Keith


Dickens, Geoffrey
Kellett-Bowman, Mrs Elaine


Dorrell, Stephen
Kershaw, Sir Anthony


Douglas-Hamilton, Lord J.
Key, Robert


Dover, Den
King, Roger (B'ham N'field)


du Cann, Rt Hon Sir Edward
King, Rt Hon Tom


Dunn, Robert
Knight, Greg (Derby N)


Durant, Tony
Knight, Dame Jill (Edgbaston)


Edwards, Rt Hon N. (P'broke)
Knowles, Michael


Eggar, Tim
Lamont, Norman


Emery, Sir Peter
Lang, Ian


Evennett, David
Lawler, Geoffrey


Eyre, Sir Reginald
Lawrence, Ivan


Fairbairn, Nicholas
Lawson, Rt Hon Nigel


Fallon, Michael
Lee, John (Pendle)


Fenner, Mrs Peggy
Lennox-Boyd, Hon Mark


Finsberg, Sir Geoffrey
Lester, Jim


Fletcher, Alexander
Lightbown, David


Fookes, Miss Janet
Lilley, Peter


Forsyth, Michael (Stirling)
Lloyd, Peter (Fareham)


Forth, Eric
Lord, Michael


Fowler, Rt Hon Norman
Luce, Rt Hon Richard


Fox, Marcus
Lyell, Nicholas


Franks, Cecil
McCurley, Mrs Anna


Fraser, Peter (Angus East)
MacGregor, Rt Hon John


Freeman, Roger
MacKay, Andrew (Berkshire)


Fry, Peter
MacKay, John (Argyll &amp; Bute)


Gale, Roger
Maclean, David John


Gardner, Sir Edward (Fylde)
McNair-Wilson, M. (N'bury)


Garel-Jones, Tristan
McQuarrie, Albert


Glyn, Dr Alan
Major, John


Goodlad, Alastair
Malins, Humfrey


Gorst, John
Malone, Gerald


Gower, Sir Raymond
Maples, John


Greenway, Harry
Marland, Paul


Gregory, Conal
Marlow, Antony


Griffiths, Peter (Portsm'th N)
Mates, Michael


Grist, Ian
Maude, Hon Francis


Ground, Patrick
Mawhinney, Dr Brian


Grylls, Michael
Mayhew, Sir Patrick


Gummer, Rt Hon John S
Mellor, David






Meyer Sir Anthony
Silvester, Fred


Miller, Hal (B'grove)
Sims, Roger


Mills, Iain (Meriden)
Soames, Hon Nicholas


Mills, Sir Peter (West Devon)
Spence, John


Mitchell, David (Hants NW)
Spencer, Derek


Moate, Roger
Spicer, Jim (Dorset W)


Monro, Sir Hector
Spicer, Michael (S Worcs)


Montgomery, Sir Fergus
Squire, Robin


Moore, Rt Hon John
Stanbrook, Ivor


Morris, M. (N'hampton, S)
Stanley, Rt Hon John


Morrison, Hon P. (Chester)
Steen, Anthony


Moynihan, Hon C.
Stern, Michael


Mudd, David
Stevens, Lewis (Nuneaton)


Neale, Gerrard
Stewart, Allan (Eastwood)


Needham, Richard
Stewart, Andrew (Sherwood)


Neubert, Michael
Stewart, Ian (Hertf'dshire N)


Newton, Tony
Stokes, John


Nicholls, Patrick
Stradling Thomas, Sir John


Normanton, Tom
Taylor, Teddy (S'end E)


Norris, Steven
Terlezki, Stefan


Onslow, Cranley
Thatcher, Rt Hon Mrs M.


Oppenheim, Phillip
Thomas, Rt Hon Peter


Oppenheim, Rt Hon Mrs S.
Thompson, Donald (Calder V)


Osborn, Sir John
Thorne, Neil (Ilford S)


Ottaway, Richard
Thornton, Malcolm


Page, Sir John (Harrow W)
Thurnham, Peter


Page, Richard (Herts SW)
Townsend, Cyril D. (B'heath)


Parkinson, Rt Hon Cecil
Tracey, Richard


Parris, Matthew
Trippier, David


Patten, Christopher (Bath)
Trotter, Neville


Patten, J. (Oxf W &amp; Abdgn)
Twinn, Dr Ian


Pattie, Geoffrey
van Straubenzee, Sir W.


Pawsey, James
Vaughan, Sir Gerard


Peacock, Mrs Elizabeth
Viggers, Peter


Percival, Rt Hon Sir Ian
Waddington, David


Pollock, Alexander
Wakeham, Rt Hon John


Portillo, Michael
Waldegrave, Hon William


Powell, William (Corby)
Walden, George


Raffan, Keith
Walker, Bill (T'side N)


Raison, Rt Hon Timothy
Walker, Rt Hon P. (W'cester)


Rees, Rt Hon Peter (Dover)
Waller, Gary


Rhys Williams, Sir Brandon
Ward, John


Ridley, Rt Hon Nicholas
Wardle, C. (Bexhill)


Rifkind, Rt Hon Malcolm
Watson, John


Roberts, Wyn (Conwy)
Watts, John


Robinson, Mark (N'port W)
Wells, Sir John (Maidstone)


Roe, Mrs Marion
Wheeler, John


Rossi, Sir Hugh
Whitfield, John


Rost, Peter
Whitney, Raymond


Rowe, Andrew
Wilkinson, John


Rumbold, Mrs Angela
Wolfson, Mark


Ryder, Richard
Wood, Timothy


Sackville, Hon Thomas
Woodcock, Michael


Sainsbury, Hon Timothy
Yeo, Tim


St. John-Stevas, Rt Hon N.
Young, Sir George (Acton)


Sayeed, Jonathan
Younger, Rt Hon George


Scott, Nicholas



Shaw, Giles (Pudsey)
Tellers for the Ayes


Shaw, Sir Michael (Scarb')
Mr. Carol Mather and


Shelton, William (Streatham)
Mr. Robert Boscawen


Shepherd, Richard (Aldridge)





NOES


Adams, Allen (Paisley N)
Benyon, William


Alton, David
Bermingham, Gerald


Anderson, Donald
Bidwell, Sydney


Archer, Rt Hon Peter
Blair, Anthony


Ashdown, Paddy
Boyes, Roland


Ashley, Rt Hon Jack
Bray, Dr Jeremy


Ashton, Joe
Brown, Gordon (D'f'mline E)


Atkinson, N. (Tottenham)
Brown, Hugh D. (Provan)


Bagier, Gordon A. T.
Brown, N. (N'c'tle-u-Tyne E)


Banks, Tony (Newham NW)
Brown, R. (N'c'tle-u-Tyne N)


Barnett, Guy
Brown, Ron (E'burgh, Leith)


Barron, Kevin
Bruce, Malcolm


Beckett, Mrs Margaret
Buchan, Norman


Bell, Stuart
Caborn, Richard


Bellingham, Henry
Callaghan, Jim (Heyw'd &amp; M)


Benn, Rt Hon Tony
Campbell-Savours, Dale


Bennett, A. (Dent'n &amp; Red'sh)
Carlile, Alexander (Montg'y)





Carttiss, Michael
Hughes, Roy (Newport East)


Cartwright, John
Hughes, Simon (Southwark)


Clark, Dr David (S Shields)
Janner, Hon Greville


Clark, Dr Michael (Rochford)
John, Brynmor


Clarke, Thomas
Jones, Barry (Alyn &amp; Deeside)


Clay, Robert
Jones, Robert (Herts W)


Clelland, David Gordon
Kennedy, Charles


Clwyd, Mrs Ann
Kilroy-Silk, Robert


Cocks, Rt Hon M. (Bristol S.)
Kirkwood, Archy


Cohen, Harry
Lambie, David


Coleman, Donald
Lamond, James


Conlan, Bernard
Leadbitter, Ted


Conway, Derek
Leigh, Edward (Gainsbor'gh)


Cook, Frank (Stockton North)
Leighton, Ronald


Corbett, Robin
Litherland, Robert


Craigen, J. M.
Lloyd, Tony (Stretford)


Crowther, Stan
Lofthouse, Geoffrey


Cunliffe, Lawrence
Loyden, Edward


Cunningham, Dr John
McCartney, Hugh


Dalyell, Tam
McDonald, Dr Oonagh


Davies, Rt Hon Denzil (L'lli)
McKay, Allen (Penistone)


Davies, Ronald (Caerphilly)
MacKenzie, Rt Hon Gregor


Davis, Terry (B'ham, H'ge H'l)
Maclennan, Robert


Deakins, Eric
McNamara, Kevin


Dewar, Donald
McTaggart, Robert


Dicks, Terry
McWilliam, John


Dixon, Donald
Madden, Max


Dobson, Frank
Madel, David


Dormand, Jack
Marek, Dr John


Douglas, Dick
Marshall, David (Shettleston)


Dubs, Alfred
Martin, Michael


Dunwoody, Hon Mrs G.
Mason, Rt Hon Roy


Dykes, Hugh
Maxton, John


Eadie, Alex
Maxwell-Hyslop, Robin


Eastham, Ken
Maynard, Miss Joan


Evans, John (St. Helens N)
Meacher, Michael


Ewing, Harry
Meadowcroft, Michael


Farr, Sir John
Michie, William


Fatchett, Derek
Mikardo, Ian


Faulds, Andrew
Millan, Rt Hon Bruce


Field, Frank (Birkenhead)
Miller, Dr M. S. (E Kilbride)


Fields, T. (L'pool Broad Gn)
Mitchell, Austin (G't Grimsby)


Flannery, Martin
Morris, Rt Hon A. (W'shawe)


Foot, Rt Hon Michael
Morris, Rt Hon J. (Aberavon)


Forrester, John
Morrison, Hon C. (Devizes)


Foster, Derek
Murphy, Christopher


Foulkes, George
Nellist, David


Fraser, J. (Norwood)
Nelson, Anthony


Freeson, Rt Hon Reginald
Oakes, Rt Hon Gordon


Freud, Clement
O'Brien, William


Garrett, W. E.
O'Neill, Martin


George, Bruce
Orme, Rt Hon Stanley


Gilbert, Rt Hon Dr John
Owen, Rt Hon Dr David


Gilmour, Rt Hon Sir Ian
Park, George


Godman, Dr Norman
Pavitt, Laurie


Gould, Bryan
Pendry, Tom


Gourlay, Harry
Penhaligon, David


Grant, Sir Anthony
Pike, Peter


Hamilton, James (M'well N)
Powell, Raymond (Ogmore)


Hamilton, W. W. (Fife Central)
Prescott, John


Hancock, Michael
Price, Sir David


Hardy, Peter
Prior, Rt Hon James


Harman, Ms Harriet
Pym, Rt Hon Francis


Harrison, Rt Hon Walter
Radice, Giles


Hart, Rt Hon Dame Judith
Randall, Stuart


Haselhurst, Alan
Redmond, Martin.


Hattersley, Rt Hon Roy
Rees, Rt Hon M. (Leeds S)


Hawkins, C. (High Peak)
Richardson, Ms Jo


Healey, Rt Hon Denis
Roberts, Ernest (Hackney N)


Heffer, Eric S.
Robertson, George


Hicks, Robert
Rogers, Allan


Higgins, Rt Hon Terence L.
Rooker, J. W.


Hogg, Hon Douglas (Gr'th'm)
Ross, Stephen (Isle of Wight)


Hogg, N. (C'nauld &amp; Kilsyth)
Rowlands, Ted


Holland, Stuart (Vauxhall)
Ryman, John


Home Robertson, John
Sedgemore, Brian


Hordern, Sir Peter
Sheerman, Barry


Howell, Rt Hon D. (S'heath)
Sheldon, Rt Hon R.


Hoyle, Douglas
Shore, Rt Hon Peter


Hughes, Robert (Aberdeen N)
Short, Ms Clare (Ladywood)






Silkin, Rt Hon J.
Tinn, James


Skeet, Sir Trevor
Torney, Tom


Skinner, Dennis
Wainwright, R.


Smith, C.(Isl'ton S &amp; F'bury)
Wallace, James


Smith, Rt Hon J. (M'ds, E)
Wardell, Gareth (Gower)


Smith, Tim (Beaconsfield)
Wareing, Robert


Snape, Peter
Weetch, Ken


Soley, Clive
Wells, Bowen (Hertford)


Spearing, Nigel
Welsh, Michael


Speed, Keith
White, James


Steel, Rt Hon David
Wiggin, Jerry


Stott, Roger
Wigley, Dafydd


Straw, Jack
Williams, Rt Hon A.


Tapsell, Sir Peter
Winnick, David


Temple-Morris, Peter
Woodall, Alec


Thomas, Dafydd (Merioneth)
Wrigglesworth, Ian


Thomas, Dr R. (Carmarthen)



Thompson, J. (Wansbeck)
Tellers for the Noes:


Thompson, Patrick (N'ich N)
Mr. Frank Haynes and


Thorne, Stan (Preston)
Mr. Mark Fisher.

Question accordingly agreed to.

Resolved,
That the Rate Support Grant Report (England) 1986–87 (House of Commons Paper No. 140), which was laid before this House on 18th December, be approved.

RATE SUPPORT GRANT SUPPLEMENTARY REPORT (ENGLAND) (No. 2)

Resolved,
That the Rate Support Grant Supplementary Report (England) (No. 2) 1985–86 (House of Commons Paper No. 587), which was laid before this House on 18th December, be approved.—[Mr. Waldegrave.]

RATE SUPPORT GRANT SUPPLEMENTARY REPORT (ENGLAND) (No. 3)

Resolved,
That the Rate Support Grant Supplementary Report (England) (No. 3) 1984–85 (House of Commons Paper No. 138), which was laid before this House on 18th December, be approved.—[Mr. Waldegrave.]

Rate Support Grant (Wales)

The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
That the Welsh Rate Support Grant Report 1986–87 (House of Commons Paper No. 100), which was laid before this House on 18th December, be approved.

Mr. Speaker: Order. I ask hon. Members to leave the Chamber quietly.

Mr. Edwards: This is the sixth main Welsh rate support grant report that I have put to the House. It is a settlement which marks an important stage in the Government's strategy for local government finance in Wales—a strategy which aims to bring local authority spending into line with Government plans and to provide councils with the certainty that they require in order to manage their affairs efficiently and effectively. The fact is that this settlement is a very good one for Wales; but that it is good is largely due to the fact that authorities as a whole in Wales have virtually succeeded in 1985–86 in bringing their spending into line with the resources that were made available. Expenditure is now back at broadly the same level in real terms as in 1979–80, the level which we inherited from our predecessors. Since 1979 the total increase in rates has been kept to seven percentage points below the change in the RPI, and this has brought considerable advantages for ratepayers in Wales.
To achieve this, local authorities have had to reduce their overspending against the Government's targets from around £50 million in 1981–82 to £4·6 million in 1985–86.
Only five authorities out of 45 in Wales have budgeted to overspend this year. On the strength of this performance, and in the expectation that local authorities in Wales will continue to exercise restraint in setting their budgets for 1986–87, I have decided to dispense with expenditure targets. This does not signal any relaxation of the Government's spending strategy. On the contrary, the Government remain determined that local authority spending in Wales should not exceed the level allowed for in the settlement.
I have acknowledged that local authorities will face difficult decisions, but they know that if they succeed it is not the Government's intention to ask for a further reduction in the level of their spending. They will therefore be in a position to plan ahead, secure in the knowledge that they can expect the degree of stability in expenditure which they have asked me to provide. They should also remember that success in constraining current expenditure has enabled me to allocate more resources to capital expenditure in the past, and that the capital allocations that I announced on 3 December for 1986–87 are higher than those for the current year. I hope that we can build on this and continue to release resources for capital expenditure because of good performance on current account spending.
I turn now to the 1986–87 settlement. I announced the main details in my statement on 18 December, and hon. Members have since had the opportunity to examine both my statement and the rate support grant report. I do not, therefore, propose to repeat what I said then but simply to refer to the major features.
Total relevant expenditure is increased from local authorities' budgeted expenditure in 1985–86 by about


£75·3 million to £1,597·1 million, an increase of 4·9 per cent. Current expenditure is £51 million or 3·8 per cent., higher than the comparable 1985–86 budgeted figure. Aggregate Exchequer grant is £54 million, or 5·3 per cent., higher than the sum in the Welsh rate support grant supplementary report 1985–86, and represents 66·8 per cent. of relevant expenditure compared with an effective percentage of 66·6 per cent. for the current financial year.

Mr. Keith Best: Rose—

Mr. Edwards: Perhaps I might finish this point. The proportion of spending met by grant has, therefore, been maintained. Block grant is £44·3 million, or 5·5 per cent., higher than in the supplementary report for 1985–86.

Mr. Best: I thank my right hon. Friend for giving way. I welcome the 5·3 per cent. increase in aggregate Exchequer grant. Can my right hon. Friend say, therefore, why it is that the Association of District Councils, in its memorandum, which he will have seen, sent to Welsh Members states:
The total of Aggregate Exchequer grant has been held at the same cash level as in 1985–86. This is a real reduction in total grant of at least 4·5 per cent. taking the Government's current view of inflation"?
Has the association left something out? Can my right hon. Friend enlighten the House?

Mr. Edwards: The figures that I have been quoting are percentages. The percentage grant has not been reduced. The proportion of spending met by grant has not just been maintained, but has been marginally increased in Wales, because that produces a comparable rating consequence of the same poundage effect in England, and because Welsh local authorities have come close to meeting the Government's targets. I have just spelt out to my hon. Friend the actual percentage increases on relevant expenditure and on current expenditure, and he knows the expected inflation rates over the period. He can therefore see that the information which, as I understood it he quoted from the district authorities misinterprets the position.
Hon. Members will note that total expenditure—I think this is the point that my hon. Friend was pressing—aggregate Exchequer grant and block grant have all been increased in excess of the forecast rate of inflation projected by any of the main forecasters. To any fair-minded appraisal, this represents a realistic and balanced settlement package.
Some local authorities have criticised the fact that the increase in provision for current expenditure—that is, spending on wages, salaries and other running expenses—is below the expected level of inflation. Others argue that the settlement does not fully take into account the levels of pay increases already agreed within local government and the expected levels of future pay awards. I have to say this in response to that kind of argument. No organisation, whether in the public or the private sector, should seek simply to pass on the costs of higher pay rises to its consumers, or, in the case of local government, to the taxpayer and the ratepayer. Local authorities must concentrate on achieving more moderate pay awards. Where awards exceed inflation, they should seek to absorb the excess costs by greater efficiency. It is not the intention of central Government that such awards should be paid for at the taxpayer's expense.

Dr. John Marek: If the right hon. Gentleman is trying to argue that case when he makes

allowance for wage awards that are well below the rate of inflation he is arguing for depressing the standard of living of thousands of people in the Principality.

Mr. Edwards: If the hon. Gentleman is arguing that those wage settlements above the rate of inflation should be passed on to the ratepayers, he is asking that the standard of living of ratepayers should be depressed. If he is producing an argument that we should be concerning ourselves because wage settlements are running below the grant settlements that I have announced for the general rate of inflation, I wish that that was the situation, but that is a wholly hypothetical situation with which he confronts the House and I do not think that we need pursue it much further.
I am of course aware of the special circumstances surrounding the teachers' pay dispute. I deeply regret that this dispute has gone on for so long, but the blame for that must rest with the unions, which have refused to negotiate. The Government have a responsibility to balance the interests not only of pupils and teachers, but of taxpayers and ratepayers. The Government have made it clear that we are prepared to make available for this purpose up to £1·25 billion additional resources over a period of four years—equivalent to about £75 million in Wales. Already part of that total—£40 million—is being made available in 1986–87 to implement the new midday supervision arrangement in England and Wales. The remainder continues to be available for a new salary structure if the conditions for its release are met. This additional provision would, of course, be reflected in GRE and block grant for 1986–87 and future years. That is a reasonable offer and councils should allow for it in setting their rates. Throughout this dispute the Government have done what they can to secure an outcome which is fair to all.
I refer now to the mechanisms for distributing the resources allowed for in the settlement and for maintaining downward pressure on spending. Expenditure targets for individual local authorities have been replaced by a tough block grant system. This will provide a fairer way of encouraging councils to constrain expenditure. The precise mechanisms have been developed in close consultation with the local authority associations and in particular take account of proposals put forward by the Welsh counties committee. Under those arrangements, for most authorities, for any given increase in expenditure there will be a reduction in grant resulting in a significantly higher proportion of costs being borne by the ratepayer. But, perhaps more importantly, the new system also offers positive financial rewards to ratepayers in those authorities where spending is held down.
If authorities in general spend in line with the settlement and draw on their reserves to the same extent as in the current year, rate rises need not, on average, exceed 3 to 4 per cent. For those authorities which budget to spend below the level of increase allowed for in the settlement, there will be very significant rating benefits. The level of rate increases is vital not only to domestic ratepayers but to business and commerce. Commercial and industrial ratepayers contribute approximately 40 per cent. of rate income and there is evidence that high rates reduce the profitability of firms, threatening existing jobs and deter growth. Councils should recognise that and rate in line with the settlement—a settlement which allows revenue


spending to grow in aggregate by broadly 5 per cent. or, as I have already stressed, by rather more than the likely rate of inflation.

Mr. Dafydd Wigley: The right hon. Gentleman has again been misleading the people of Wales as well as the Chamber by saying that we can expect rates to be held at the present level or even reduced. Does the right hon. Gentleman not realise that in the county of Gwynedd a rate increase of 20p out of the 23p that it has announced was needed just to maintain the services at the current level? He has just announced that that level is satisfactory because it is in line with the targets that were announced by the Welsh Office in 1985. If it is acceptable to have that level of services this year, why does he expect Gwynedd either to reduce the service next year or have such a massive increase in rates?

Mr. Edwards: I do not agree with the hon. Gentleman. I have been talking about the average percentage increase across Welsh local authorities as a whole. Clearly that varies from one county and district to another. I made that clear in a previous statement to the House. I take the opportunity of apologising to the hon. Gentleman, because in the press handout there was an error that affected the forecast rate increase on certain assumptions in one of his districts. Having said that, it is also clear that if the settlement in Gwynedd is in line with the assumptions that I have spelt out there need not be a large increase for ratepayers. Indeed, it could be below the general level for Wales. Gwynedd has done well out of the settlement.
I move on to say what happens to grant if authorities do not spend in line with the settlement. If authorities can hold their spending broadly in line with the settlement, the amount of grant claimed will equal the amount of grant available. However, if aggregate spending exceeds the level of expenditure provision there could well be an underclaim of grant. The hon. Member for Caernarfon (Mr. Wigley) tabled a question about that, and I have answered it. I have already told the House that the amount of any such underclaim will be retained in Wales for the benefit of local authorities. I shall await the 1986–87 budget returns before deciding the method of distribution. In setting their budgets, individual councils will therefore be most unwise to assume that they will necessarily benefit from the distribution of any resources unclaimed as a result of overspending. We will take the decisions when we have the budget returns.
Against that background, I am surprised and extremely concerned by press reports which suggest that some authorities are planning what appear to be wholly unreasonable increases in expenditure and rates in 1986–87. Apparently some councils are contemplating expenditure increases of almost double the likely rise in costs in the economy as a whole. In some Welsh counties there is talk of rate increases approaching 20 to 30 per cent.—between five and seven times the rate of inflation. One authority, Dyfed, is, I understand, considering rate increases of 30p in the pound—almost 20 per cent. If it goes ahead with such a proposal, I believe that many ratepayers in Dyfed will think it disgraceful. If that authority budgeted in line with the forecast rate of inflation its rates could, in fact, actually fall. Media reports have suggested other examples of proposals for increases in expenditure and rates which, if the reports are

correct, I can only regard as totally irresponsible. These councils are well aware that such action would result in unacceptable overspending, which would certainly jeopardise future stability and the opportunity that the settlement provides for progress in later years. Local authorities have a duty to act responsibly in setting their budgets and in controlling their expenditure. I urge them to think again if they are considering the sort of figures that I read about in some newspapers.
If local authorities act irresponsibly in 1986–87, they will inevitably create major difficulties for the future. If they want more capital expenditure, and they all say that they do, and if they want the ceiling of expenditure to rise in line with inflation, which is the result that they have asked us to produce, they should not throw away the opportunity that the settlement gives them. There is no need for overall expenditure in Wales to exceed the amount allowed for in the settlement. As in any organisation, there are real opportunities in local government, given the will for greater efficiency and better use of resources.
In its report published in 1985, the Audit Commission identified considerable scope for efficiency savings within local government. Over £1 billion of potential savings have been identified for England and Wales. While no separate estimates have been made for Wales, there can be no doubt that opportunities for savings exist, and those resources should be made available for other use, including the development of priority services.

Mr. D. E. Thomas: The Secretary of State might recall that when he made his initial statement to the House I took up with him the issue of the Audit Commission's sample in Wales. Will he review that matter and ensure that separate figures are produced for Wales so that we can see the so-called savings in Wales and ensure that the costs of Welsh local government are reflected in them?

Mr. Edwards: As the hon. Gentleman will be aware, I do not run, and cannot dictate to, the Audit Commission, but in due course it hopes to be able to produce such figures. I agree that it would be helpful to have them. The Audit Commission has made it clear in presentations that I have attended that it thinks there is plenty of scope for savings in Wales, as in England. The general statements that it makes are as valid there as elsewhere. Members of the Audit Commission, Mr. Banham and others, have come to Wales to spell out to Welsh local authorities ways in which they could make savings. They have identified a number of such areas.
Already good examples have been set by some authorities in Wales, and there is every reason why ratepayers should expect all authorities to seek efficiency savings on their behalf. I have seen correspondence from the treasurer of Clwyd county council in the past few days. I would have rather more sympathy if it were not one of the counties which has increased rather than decreased the number of employees, as many other councils and even more districts have done. [Interruption.] I want efficiency in local government and the best possible return—that is in the interests of employment in the area—and the best use of resources. I cannot think of a way more guaranteed to create unemployment than for local authorities to waste their money and have excessive rate burdens for local industry.


Ratepayers should demand evidence from their councils that there is a continuing programme of efficiency reviews and action to implement them. They should seek evidence that those reviews have produced savings and that the resources thus released have been put to good use. In every local authority area it would be of great benefit to everyone if a series of questions on those issues were repeatedly asked.
In education, for example, the real educational benefits for children, which arise as a consequence of rationalisation and taking surplus places out of use, are accompanied by substantial revenue savings which can be redeployed to advantage elsewhere. One example of that is my area of Dyfed, where Her Majesty's inspectors have revealed that in the primary sector there are 11,000 surplus places. If some of those were redeployed, there would be more resources for other parts of the education service.

Mr. Alex Carlile: May we take it from the hon. Gentleman's use of the word "rationalisation" that he is now giving official blessing to a policy to close village schools in rural Wales?

Mr. Edwards: Liberal Members are trotting around Powys saying that there should be no closure of rural schools. The decision on which schools should close must be taken by the local education authorities. I say to the hon. and learned Gentleman, especially coming from an area with the highest level of spending in England and Wales relative to GRE, which has a low rate burden and which has a very good settlement compared with any other local authority, that I hope I never hear him complain about inadequate education provision in schools in other areas when he is not prepared to contemplate any change in the education structure in his area despite there being a substantial reduction in the numbers being educated. That is the sort of double standard that we have come to expect from the Liberal party. His comments do not deserve to be taken seriously.

Mr. Keith Raffan: Does my right hon. Friend agree that surplus places mean not only bad finance but bad education? How can we justify one teacher teaching four age groups in one classroom? How can that be good education?

Mr. Edwards: What is absolutely and undoubtedly clear is that if there is a substantial reduction in school numbers in one area, but we do not alter school provision, in other areas the standard of education will not be as good as it might otherwise be. As the Government have maintained provision substantially unaltered—there has even been an increase in some areas—during our period in office, there can be no complaints from those who have refused to accept rationalisation.
Some authorities have been very slow to grasp that opportunity, and they should be invited to explain why. There are many other examples of where savings can be achieved, including improved maintenance of buildings, efficient use of energy, better management of vehicle fleets and better use of resources generally. I hope that during this debate hon. Members will encourage their councils to take the necessary action to achieve savings. We all have a responsibility to identify and eradicate waste and extravagance.
I repeat what I said at the start. The settlement for 1986–87 is a very good one for Wales. Anyone who

listened to the earlier debate will recognise that fact. Welsh local authorities have a much easier task than their English counterparts. That is the reward for sensible behaviour. Welsh local authorities have now been given an opportunity to set local government finance on a secure base. If councils choose to ignore that opportunity and unnecessarily increase their expenditure and add to the burden of rates, they will be guilty of abdicating that responsibility. I hope that hon. Members on both sides of the House will join ratepayers in discouraging such behaviour.

Mr. Roy Hughes: That speech lasted 25 minutes.

Mr. Edwards: The hon. Gentleman complains, so I shall never give way to him if he seeks to intervene in a speech that I am making.
I commend the settlement to the House.

Mr. Barry Jones: The Secretary of State is very testy tonight. I hope to make a shorter speech than his. He has delivered his sixth local government budget, and again he has waved a big stick. It is bitter medicine for both the professional and elected local government leaders in Wales.
Last month, John Morgan of the Western Mail, wrote:
Welsh Secretary Nicholas Edwards will today open the final chapter in his campaign to bring local government expenditure down to 1979 levels.
That report exposes the unpleasant objectives of Ministers for Wales and local government. It is a matter of pride to the right hon. Gentleman that he has dragged expenditure down to 1979 levels in real terms, but we regard it as a failure by the Government to comprehend the huge demand made on local government services by hundreds of thousands of Welsh citizens.
We say that the Government are blind and deaf to the real needs of our truly beleaguered communities. It can also be argued that the policy that the Secretary of State has outlined today is unworkable. There has been a cut in grant in real terms. The latest calculation by the House of Commons research staff is that the overall cut in real terms between 1978–79 and 1986–87 is as high as 12·4 per cent. The right hon. Gentleman has robbed our local government system and taken away its independence.
In six years of office, the Government have presided over Welsh district councils increasing their budgeted spending by only 46 per cent. During the same period, the retail prices index rose by 74 per cent. Beside the widespread bitterness at this proposed settlement, there are two strong and justifiable criticisms. The first is that even local treasurers say that the settlement is too complex with many quirky consequences, and the second is that the settlement does not take account of pay awards well in excess of inflation.
I shall quote Mr. Morgan of the Western Mail again, this time from 20 January, when he wrote:
With the growing feeling that the Welsh councils have been 'taken for a ride' has come a veiled threat from the Welsh authorities that they will not knuckle down indefinitely without positive action from the Welsh Office to offer even greater incentives for doing so … the question that is being asked behind closed doors is why should the Welsh cut back while the English continue to spend?
Nothing that the right hon. Gentleman has said today will make Welsh local authorities change the view that Mr. Morgan so accurately chronicles.


There is another criticism, which is encapsulated in an answer given to me on Monday 20 January. The Secretary of State replied:
On 12 December 1985 there were 181,496 unemployed claimants in Wales. The corresponding figure in December 1979 was an estimated 78,476 and the increase between the two dates is 103,020 or 131·3 per cent.
The right hon. Gentleman forgets too easily that mass unemployment puts huge pressure on the services provided by our councils, and the Government are not responding effectively to the social and economic emergency that is creating throughout Wales. The right hon. Gentleman has today ignored the crucial problems that bother local authority leaders of all parties in Wales when it comes to facing the problems that he is setting.
I should like to make a plea on behalf of my own county of Clwyd. I ask the right hon. Gentleman to receive a deputation from Clwyd urgently to try to head off a financial crisis. So serious is the matter that chief officers have met hon. Members who represent the county. I have confidence in the county's chief executive and the vice chairman, Mr. Elwyn Conway, a responsible county council leader who has left me in no doubt about the problems that the county faces. Clwyd does not want a rate rise of more than 10 per cent. Will the right hon. Gentleman respond sympathetically and urgently?
I shall quote from a letter that the county treasurer has sent to hon. Members, and I know that a letter was sent to the right hon. Gentleman. The treasurer writes:
Clwyd will receive in 1986–87 a much worse grant settlement than in previous years and the basis of the Welsh settlement has been altered to Clwyd's specific disadvantage, and the legal and technical changes introduced by the Welsh Office will produce a situation where there is now every likelihood of a larger increase in the County precept. The problem for Clwyd is caused by technical changes in the Rate Support Grant allocation where the Government is assuming that Welsh County Councils will be spending about 5% more next year than in the current year and for this they have provided an average increase throughout Wales in block Grant of the order of 5%. This will represent"—
this is the crunch for Clwyd—
a Clwyd increase of only 1·8% and will mean the loss of Grant amounting to at least £2 million.
That is not the end of the tale. The county is trying to cope. There is widespread parental unease about the cuts in schooling provision. Many parents are sick with worry. I will detail in brief the cuts in the education service. They are not peculiar to Clwyd. There is reduced provision for nursery education, 47 teachers and 39 nursery assistants; a reduction in the education technology budget; deletion of secondary teachers required to maintain curriculum level; increased prices for school meals; delete the net cost of 60 teachers seconded for training; a cut in further education colleges; a reduction in ancillary staff; and a reduction in the number of primary teachers. That totals £1,130,000.
When we on the Opposition Benches hear public schoolboys telling us that, it is rather hard to take, because we know that more grants than ever before are being given to support private education in Wales. In reply to the charge that local authorities in Wales do not save as much as they should from falling school rolls and surplus places, it must be pointed out that in many cases, especially perhaps in rural areas, the local school is more than a school. The prospect of closing it, if not unthinkable, carries all sorts of social and community difficulties. The

plan by the Secretary of State might be an economist's dream, but it is not what the community wants. The trouble with this rate support grant settlement is that it is not what our communities need and it is not what they deserve.
I have a brief point to make about Gwynedd and Clwyd and the police force. We all want to see the restoration of the policeman on the beat. Rural and community policing is declining, and elderly people are increasingly afraid of break-ins, muggings and harassment. The right hon. Gentleman knows and might even agree with that. I am seeking support from the right hon. Gentleman for the joint approach of the Clwyd and Gwynedd county councils to the Home Secretary. The chairmen of both councils believe strongly that rate borne increases in the police authority budget at a time when other local government services are being severely restricted and reduced, starkly illustrate the inadequacy of the resources made available to the two counties in the rate support grant.

Mr. Best: Does the hon. Gentleman accept that provision is made in the settlement for a 7·5 per cent. increase in police pay? How does he square that with the gloom and doom that he has been spreading about this settlement?

Mr. Jones: The hon. Gentleman has shot the Government's case apart. One of the fundamental defects is that within the settlement there is insufficient provision for the 7·5 per cent. police pay rise. In his intervention the hon. Gentleman is arguing against his right hon. Friend.
Powys county council received an increase of just 1·8 per cent. I am informed by the council that in real terms that represents a cut in grant of more than 4 per cent., or £2 million. The council tells me that this underfunding is made more injurious because Powys is sparsely populated and highly dependent upon rate support grant.
Powys says that there will be a precept increase of up to 25 per cent. The Secretary of State must have it wrong. Several counties with potentially astronomically high increases in April have been mentioned and the right hon. Gentleman must bear the burden of the blame. There could be a cut of £600,000 to the education authority in Powys.
In Mid-Glamorgan, because of the penal nature of this settlement, the education department will be forced to cut £750,000 next year. The social services department is being forced to cut £150,000. It is said that the likely rate precept increase will be at least 10 per cent.—probably more. I have been told by Mid-Glamorgan that the education cuts will mean more teaching heads in schools and a further reduction in the number of teaching staff.
Mid-Glamorgan exemplifies the terrible problems of coalfield and valley communities. I plead with the Secretary of State to be more generous, because the socioeconomic problems are growing by the month. The environmental health chiefs are monitoring the health of pupils returning to school after the Christmas shutdown. Cases of dysentery are being reported. New figures show that last year there were 572 cases in Wales compared with 48 in 1982. In a recent article in the Western Mail, Mr. Roger Dobson wrote:
Dr. Elizabeth Roberts, medical officer in Mid-Glamorgan, believes that social conditions must be a factor
in the return of dysentery cases. We have not seen so many cases since before world war 2. I urge the Secretary of State to look carefully at the predicament of Mid-Glamorgan county council.


I remind the Secretary of State of what the district councils have been saying about the settlement, which he discribed tonight as being better than usual. The Municipal Journal states:
'Disappointing' is the verdict of Cllr Tyssul Lewis, chairman of the ADC's Welsh Committee, on the annual rate support grant settlement …
'The Welsh Secretary described the settlement as a challenging one—it certainly is', he said.
Cllr Lewis said that despite the abolition of targets the RSG system is 'just as complicated and involves as much Government interference'.
He added: 'The settlement means that either services will have to be cut drastically or many district ratepayers will face rate increases of over 10 per cent. next year'.
I shall give just one instance of a district council problem. Afan has been unjustly penalised because of the change in the grant mechanism. If Afan increases expenditure by the rate of inflation, it will face a rate increase of more than 11 per cent. I am informed that, because of the anomaly, tenants may face council house rent increases of more than the Government's suggested 65p.
There is a question mark over nursery education in Wales. Class sizes are bound to increase. Joint financing schemes between the health authorities and county councils may fall apart. We all want local authorities to cope with child abuse. We therefore need more, not fewer, social workers. There is fear in the counties that services for the elderly are at risk. The recent public expenditure White Paper gives us no respite. The cuts continue apace.
The Secretary of State has attempted to sell his settlement as one better than usual. That is not good enough. The settlement's complexity has been denounced by local authorities. It is a mean settlement because it in no way copes with the challenge of pay increases above the rate of inflation. I want the Secretary of State to convene an urgent meeting with local authorities to discuss a less complex and more generous approach. The settlement is not acceptable because council rates will rocket. We shall oppose it.

Sir Anthony Meyer: The hon. Member for Alyn and Deeside (Mr. Jones) did not make much more of a fist of picking holes in the settlement this time than he did on 18 December. It is generally regarded as acceptable throughout Wales.
We have a problem in Clywd, to which my right hon. Friend the Secretary of State made a cursory reference, and on which the hon. Member for Alyn and Deeside dilated at some length. When my right hon. Friend announced the rate support grant settlement to the House on 18 December, it was generally received as a fair one, unlike the reception accorded to the English settlement. The hon. Member for Alyn and Deeside was hard put to it, then as now, to find any solid criticism. Such vague complaints as he had to make did not relate specifically to his county of Clwyd. My hon. Friend the Member for Delyn (Mr. Raffan), the hon. Member for Wrexham (Dr. Marek) and I had no reason to make any particular point about the treatment of Clwyd. Indeed my right hon. Friend told me:
If … Clwyd can limit the year-to-year growth in its spending to 5 per cent., I expect that it will have a similar increase in rates."—[Official Report, 18 December 1985; Vol. 89, c. 333.]
The county treasurer, Mr. Greening, when he saw the actual figures, saw at once that something was wrong—

so wrong that he thought that it must be a misprint. The Christmas holidays were upon us and it was too late to warn hon. Members or to get an answer from the Welsh Office until after the holiday. The matter is hugely complicated, and I am not sure whether even the chief executive understands it.
What seems to have happened is that the block grant has been calculated on the 1985–86 budget figures instead of, as hitherto, on the 1986–87 notional figures, which were the figures used last July by the Welsh Office in the exemplifications that it gave to the county councils of the sort of level of grant that they could expect for any given level of increase in expenditure. Moreover, as far as I can make out, these were the figures that my right hon. Friend was using when he told me on 18 December that Clwyd's precept would not need to rise by more than 5 per cent.
Perhaps my right hon. Friend will tell me that the county council freely chose that method of calculation, and it is true that it did. However, it did so on legal advice from the Welsh Office, legal advice that would have been well founded for England but which for Wales has had greatly distorting consequences. Because of the altered base of this purely technical change, Clwyd will get a mere 1·8 per cent. increase in grant compared with a Welsh average of 5·3 per cent. and 11·8 per cent. for some counties such as Dyfed.

Mr. Nicholas Edwards: My hon. Friend has given an accurate technical account of the basis of the figures, and I am glad that he has acknowledged that he was aware of the technical change, which was discussed in detail with the Local Authorities Association. However, my statement about the rate consequences in Clwyd was not based on outdated figures—I believe that that statement was true and is true.

Sir Anthony Meyer: I accept what my right hon. Friend has said. It is not part of my case that Clwyd is guiltless in this matter. However, the altered basis means a loss of no less than £2·2 million, compared with what the county had quite reasonably budgeted for. In those circumstances, there is not a hope in hell of keeping the rate increase to 5 per cent.—it is unlikely that the council will be able to keep it to 15 per cent.
I am not going to argue that Clwyd has been invariably prudent in the management of its finances. I do not share all the criticisms made by my hon. Friend the Member for Delyn. In particular, I think that the expenditure on Bodelwyddan castle is, on balance, justified. However, many economies, particularly at shire hall, should have been made, but have not been—not always, or even usually, because of any failure by officers to prepare economies but because, with a hung council, there is no disciplined party with the electoral courage to carry through measures that raise a storm.
However, on the present issue I believe that all Clwyd Members are more or less at one. The county has an unemployment level that is as bad as any in Wales. It desperately needs infrastructure developments, training schemes and expanded education. To push the county into a position where it has to make sharp increases in rates, thus running the risk either of driving more jobs away or of facing rate capping, leading to a cut in essential services, is completely unacceptable.
The reply sent by Mr. Morgan of the Welsh Office on 14 January to the county treasurer, blandly admitting that


Clwyd had lost £2·2 million and that this was "unfortunate", cannot possibly be the Welsh Office's last word on the matter. Perhaps my right hon. Friend the Secretary of State for Wales will tell me that later in the year there may be some unused grant that can be reallocated to Clwyd, but that will be far too late. Unless we know now more or less how much it will be—and by the nature of things we cannot—it will be pretty well useless if the object of the exercise is, as I understand it to be, to get councils to budget more carefully.
My right hon. Friend rightly made much of the need for certainty. What has happened in Clwyd's case has had exactly the opposite effect.

Mr. Alex Carlile: Writing in this morning's edition of the Western Mail John Morgan said this:
One minute the Welsh Office signals local authorities to spend more and the next minute it slams down the shutters and imposes a moratorium.
That is a correct assessment of the situation. It appears that the Secretary of State for Wales has become so involved in the astonishing complexity of his own formulae that he has lost sight of what is really happening in the counties and districts of Wales.
In general terms, the effect of the 1986–87 settlement can be summarised very simply. The block grant fails to take into account the real level of expenditure that is necessary even to maintain existing services. As a result, even in what the Secretary of State dubs fortunate counties like Powys—later I shall take issue with him on that point—the authorities face a virtually impossible and unbridgeable shortfall. It is part of the pattern of declining Government support.
In real terms, there has been an overall cut in grant of 12·4 per cent. between 1978–79 and 1986–87. The settlement for 1986–87 fails to take into account adequately the settlements to local authority workers—settlements reached by these local authorities on the basis of the best advice and of their knowledge and assessment of the situation—and it wholly fails to take adequately into account the effects of the eventual settlement of the teachers' strike.
The result is that the Welsh counties are facing cuts in services. I said earlier that the Secretary of State dubbed Powys a fortunate county, which apparently receives a great deal of money from the Government. Let us consider the effects upon schools in that so-called fortunate county, which happens to be the one in which my Montgomeryshire constituency is situated. I have to declare an interest. I have three children in Powys county schools. Indeed, I believe that I have more children in state schools in Wales than have the whole of the Conservative Benches added together. We know what is going on in Powys schools.
I must remind the House that I am referring to an apolitical county council. It has no political axes to grind. It is trying to make an honest endeavour to meet the needs of the population. Tomorrow the education committee for the county of Powys will have some extremely difficult decisions to make. There is no doubt, as the county treasurer would tell the right hon. Gentleman if he were listening, and as county councillors would tell him if he

were listening, that the Government's policy means that now they have to choose whether to abolish nursery education in Powys. What a disgraceful indictment that would be of this Secretary of State and this Government. He referred to county councils abdicating their responsibilities. The sooner he abdicates his responsibility the sooner their might be some possibility of services at least being maintained in the Welsh counties.
Powys county council education committee has to decide, too, whether to close down village schools. Tonight we have heard the Secretary of State use the word rationalisation in the context of education. Having heard that, we know that the Government set no store by the place of village schools as part of the community. The Government do not understand villages that are threatened by the closures of their schools, such as Llanerfyl, Llandinam and Bausley—only three of many threatened in my constituency. The closure of an effective and popular school will severely damage community life.
The Minister will no doubt fall back on the long discredited Gittins report, which concluded that small village schools were not good for children's education. The parents in my constituency do not doubt that village schools work, not only for the village, but for the children. They provide an excellent education.
Powys county council education committee will have to decide whether money should be made available for textbooks in high schools. The Government refuse to believe the truth of that assertion. Yet I have told the Minister before that in one high school in my constituency the head teacher allows his heads of departments 80p per child per year for the purchase of materials and equipment. In the high school that one of my daughters attends that figure of 80p is increased to the sum of £1. For example, the head of the French department has £1 per child per year to spend on resources and materials. That is the reality of what is happening in the so-called lucky county in Wales, and the reality of what the Government are doing to local government in Wales.
The schools are even dirtier than they were before. In Powys the council has had to cut down on the amount of cleaning carried out, because of the Government's policy. The council cannot afford to employ enough cleaners to clean the schools to their former standard.
The parent-teacher associations whose traditional role has been to provide extras for the schools—the things that turn a successful school into a successful community school—are now being forced to agonise about whether they should buy the books, the money for which the taxpayer has already paid the Government—but which the Government are not returning to the local authority.
In addition, all other county council services are affected. If the right hon. Gentleman cares to drive over the rural roads of Powys he may find them bumpier than he would have believed possible. If he believes that the lessons of the Beckford inquiry should be learnt, he will discover that social services departments in Wales do not have the money to put them into effect.
If the Secretary of State believes that consumer protection and trading standards departments should exercise their delegated powers to bring to book those who cheat the public, he will discover that in many Welsh counties they cannot afford to consider most prosecutions. If he believes that the county smallholdings policy which Powys has successfully operated for so many decades is worth anything, he should give more money to that county


so that the policy can be perpetuated and enhanced. If he continues as he has been doing, counties with smallholdings will be forced to sell them off, which will toll the death knell for more young farming prospects.
The Government are dismantling the rural infrastructure. We can draw only one small crumb of comfort from the appalling statement that we heard from the Secretary of State tonight. The people of rural Wales have rumbled him, and he will learn his lesson in due course.

Mr. Keith Raffan: May I follow the remarks of my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer). To make my points about the current predicament of Clwyd county council, I must refer to the background to the settlement. At the time of last year's settlement, Clwyd county council was given a provisional expenditure figure for 1986–87 of £161·3 million. In July last year, my right hon. Friend the Secretary of State said in his provisional statement that if Clwyd's spending could be contained to its 1985–86 budget level plus 5 per cent.—or £164·6 million—grant entitlement would be £94·6 million. Then in December last year, in the final statement on the rate support grant, the spending figure was adjusted to £163·7 million, which was a reduction of £900,000, giving rise to a grant of £91·9 million, which was a massive reduction of £2·7 million.
In July, Clwyd understood that it would not be penalised if its spending was contained to its 1985–86 budget level plus 5 per cent., but now its grant has increased by only 1·8 per cent., whereas the average for all the counties of Wales is 5·3 per cent. and Dyfed is receiving 11·2 per cent.
I, too, wish to quote from the letter to the county treasurer, Mr. Ralph Greening, from Mr. Morgan of the Welsh Office. On 14 January he wrote:
We have adopted the practice of issuing in July provisional figures for the RSG settlement to assist local authorities.
How can provisional figures possibly assist local authorities when they are so way out? No one expects provisional figures to be confirmed exactly, but Clwyd county council is entitled to expect something near to the provisional figure.
To recap, may I say that Clwyd was initially led to expect a lower grant than it was given in the provisional statement in July. It was encouraged to expect a higher grant in that statement, on the basis of which it budgeted, only for the grant to be lowered once again in December. The county council is now in a serious financial crisis, admittedly aggravated by its own inability to control its spending. I repeat my hon. Friend's quote from Mr. Morgan's letter. He said:
Because we"—
the Welsh Office—
also had in 1986–87 the uncertainties caused by the introduction of a new GRP schedule"—
that is a grant-related poundage schedule—
to replace targets the figures were inevitably more likely to change than usual, and I agree that it is unfortunate that this year Clwyd's figures changed to the extent that they did.
It is not just unfortunate, it is disastrous. The GRP schedule has had a devastating effect on Clwyd, with a loss of £2·2 million in grant.
I should be grateful if the Secretary of State would explain to the House, not in the technical jargon beloved of the Treasury, but in layman's language so that I and the House can understand it, the grant-related poundage

schedule. If we do not understand it—I admit I do not—how can we explain it to our county councillors, let alone to the ordinary man in the street?

Dr. Marek: For years the hon. Gentleman has argued that Clwyd county council could make massive savings in its administrative costs and that there is much waste. Is he now arguing that this cut in grant for 1986–87 is disastrous for the council, and that it cannot make savings in administration or anything else? If so, it is a different argument from the ones that he put previously.

Mr. Raffan: The hon. Gentleman has jumped the gun. I was about to make some points—as I always do—about Clwyd county council's spending. I adhere to the position that I have consistently expounded, and I am glad that the hon. Gentleman remembers it so well. The GRP schedule, when added to the fact that the county council has allowed its spending to get completely out of control, has had a disastrous effect. I shall expound on that in more detail in a minute.
My understanding of the consequences of the GRP schedule, as opposed to how it works, which I do not begin to understand, and which I do not believe most county councillors understand—unfortunately I was not present at the meeting with the chief executive of Clwyd last Friday because I was attending a debate here, but I believe he made it clear that he was not sure whether he understood it, for which I do not blame him—is that they hit authorities whose spending is out of control. That is why Clwyd is so hard hit. If, like the districts within Clwyd, Clwyd were a reasonable spender, it would be in a much more favourable and a much happier position. Nevertheless, that does not explain why the July provisional figure was so way out. It cannot assist a local authority to be encouraged to budget on the basis of a considerably higher grant than it receives. That causes chaos for it.
Clwyd's position is of course severely aggravated by the fact that it has allowed its spending to get so out of control. Last year's settlement for Clwyd was widely regarded by hon. Members of all parties, if not publicly, certainly privately, as generous. Indeed, the county treasurer, Mr. Greening, conceded as much. At that time the county council had a real opportunity to bring its spending under control, but it ducked the issue. It has only itself to blame for the consequences.
The irony is that many of those Clwyd county councillors who strongly criticise supposed central Government interference in their affairs, as soon as they face critical financial problems largely of their own making, are only to happy to try to pass the buck back to central Government. The message must go out strongly from this debate, from the Front Bench, that Clwyd must now, without further delay, put its house in order.
I was glad to see in the minutes of the policy finance and resources committee meeting on 21 November that Clwyd is coming round to my view on the need to bring in management consultants. According to the minutes, it discussed
possible benefits of using independent organisation management consultants in a detailed review of council services"—
I hope council staffing will also be included—
with a view to reducing overall expenditure levels …It was agreed the matter be investigated further.
I hope that the matter will be investigated further, quickly and thoroughly, and that action will be taken on the basis of that investigation.


I also hope that the full education committee will reverse the irresponsible decision taken last week by a narrow majority of the education (development and general purposes) sub-committee not to put out to consultation the director of education's "Review of primary schools' accommodation." How can such action be justified when there are 16,000 surplus places in Clwyd, when the teachers' unions agree that there must be action to deal with the situation and when it is widely agreed that the surplus places are bad, not just for finance, but for education? One teacher, however good—and the teachers in our small rural schools are second to none—cannot properly teach four age groups in one classroom. Not putting the review out to consultation cannot be justified when an estimated £640,000 could be saved on a recurring basis if the report was implemented.
Finally, with the county already paying £8 million a year in interest and repayment of capital, capital spending must be strictly limited to statutory obligations.
Even before the loss of grant, it was generally estimated that Clwyd faced a 17p rate rise due largely to the council's failure to bring its spending under control. That rise would be devastating for local industry and jobs, let alone an intolerable burden on domestic ratepayers. It is no use the chief executive of Clwyd county council expressing in a letter to me, as he recently did, his anxiety about the council's high unemployment figures, when the council's own spending policies are ensuring that unemployment not only remains high but increases.

Mr. Allan Rogers: It is with great trepidation that I intervene in a Freudian dispute. Perhaps I had better leave it to the hon. Members for Clwyd, North-West (Sir A. Meyer) and for Delyn (Mr. Raffan) to fight out between themselves what is the true position in Clwyd. I am sure that the fight will be developed considerably in north Wales over the next few months.
The Secretary of State for Wales told us that we have reached an important stage in his financial strategy for Wales. I agree that it is an important stage in the continuing reflection of the Government's hypocritical policies that in Wales have created private wealth and public squalor.
In the limited time that is available I shall take up the Government's repeated claim that they are spending more money on local government, the Health Service and education than in previous years. Welsh Office Ministers reiterate the claim, and recently the Secretary of State told a Welsh Joint Education Committee deputation that there were 12 per cent. fewer schoolchildren and that education expenditure in real terms was as high in 1984 as it was in 1979. He said that he could not understand why there were so many complaints of deterioration in education provision. It is not true that expenditure in real terms is at the same level now as in 1979.

Mr. Nicholas Edwards: It is higher.

Mr. Rogers: We do not accept the calculation of the Welsh Office of expenditure in real terms. The fiddlers of the figures on the Government Benches are constantly changing the basis on which grants are calculated. If anyone with any sense examines the figures he will realise that what is being claimed by the Government is

manifestly not true. My colleagues and I believe that the deflator that is used in the calculations is especially inappropriate for education as it does not take into account factors such as the Clegg award for teachers' salaries in 1980, for example.
The comparisons that are made by the Welsh Office between expenditure in 1979 and 1984 do not cover the full education budget. They exclude the school meals service, mandatory awards, net contributions to other authorities, debt charges, urban programme expenditure and career services. The Secretary of State is continually changing the basis of the calculations and telling us that expenditure has increased.
A more accurate estimate of what has been expended in real terms shows that in Mid-Glamorgan there was a reduction in expenditure of £10 million from 1979 to 1984. That view is shared by Mr. Tettenborn, who is the financial adviser to the Welsh Counties Committee. He stated recently that between 1979 and 1980 the local authorities in Wales have reduced their expenditure on the education service by 3 per cent. in real terms, a reduction of about £20 million.
The fundamental flaw in the Government's so called generous settlement is the ludicrous allowance for inflation. Current expenditure is up by 3·8 per cent. over the level of spend in the 1985–86 budgets for Welsh authorities. Yet pay settlements, which are more important than price inflation, although that is well above 3·8 per cent., are well above the inflation rate. Manual workers settled their 1985 claim and the cost has worked out at about 9·5 per cent. for Mid-Glamorgan. Teachers were offered 6·9 per cent. for 1985 and the cost would be 7·5 per cent. in 1986–87. They are looking for much increased salaries next year. The administrative, professional, technical and clerical staff are seeking a 12 per cent. increase next year. It is clear that the unions will not get all that they want, but none will settle for 3·8 per cent., which is well below the inflation rate.
The Government will respond by saying that staff levels should be reduced. That will mean that in local government and the Health Service we shall see services reduced. That will happen because both sectors are labour, or people-intensive.
The limitation on time does not allow us to examine the complexities of the formula that the Secretary of State is using to arrive at the settlement.
A good many arguments have been put forward for the rural parts of Wales. I accept the very real needs of areas like Powys, particularly in relation to the closure of village schools, with the huge problems of transport that these people face, especially with the new Transport Bill—there may well be severe difficulties, compounding what is already a very difficult situation. This is something that has not been taken into account, incidentally, in this settlement.
Coming to the most populated part of Wales, however, the area that I and some of my hon. Friends on the Opposition side represent, the south Wales valleys area, Mid-Glamorgan has one of the worst employment rates in Great Britain. The Rhondda, Merthyr, Cynon and Rhymney valleys are district council areas which, on national figures and estimates, score highest on usually accepted indicators for social deprivation. We are certainly not proud of this, but it demonstrates that this is an area of great need.


In one sense, it means—and I wish that the Secretary of State would really take this on board, coming from the area that he does—that the education budget in a county such as Mid-Glamorgan is part of the county council's provision for the social services, with high expenditure on free meals, education maintenance allowances and necessitous clothing grants. The social welfare expenditure component in the education budget has increased sharply over the past five years because of the industrial policies of this Government.
One other factor, and we are all proud of this development—[Interruption.] The hon. Member for Ealing, North (Mr. Greenway) may find it very amusing to consider the difficulties that we suffer in the South Wales valleys. Maybe if we can get back into power we can direct some industry to where the people live and where they need it. Meanwhile, we have to live with the difficulties that we have. In this, we would expect some help from the Secretary of State for Wales. We do not want him crawling back to the Cabinet, making excuses from Wales; we want him to get back there and fight. But he does not fight for Wales, and the best favour that he could do the Welsh people would be to resign tomorrow.

Mr. Wigley: On a point of order, Mr. Deputy Speaker. Why have you, as the Deputy Speaker, not called representatives of each party in the House on a matter that is of such vital importance to the people of Wales?

Mr. Deputy Speaker (Mr. Ernest Armstrong): I quite understand the hon. Gentleman's concern, but it is a very short debate, and I regret very much that I have been very limited in the number of Back Benchers whom I have been able to call.

Mr. Wigley: Mr Deputy Speaker—

Mr. Deputy Speaker: Order. I just want to say that it is always a very difficult exercise, but it is within the discretion of the Chair and I try to be as fair as I can.

Mr. Wigley: This is not acceptable, Mr. Deputy Speaker. This is the second time that the Chair has done this in the past few years. It was within the discretion of the Chair to call fewer Members on the Government side of the Chamber, in view of the length of time taken by the Secretary of State to open the debate. Hon. Members on the Opposition side have not had much time. It is totally unreasonable and unacceptable to my party that we should be gagged on the matter when a 23p rate was announced last Thursday in my county of Gwynedd, and not one Back Bencher from Gwynedd has been called. Now you are not giving an opportunity for any voice to be heard in this Chamber on this issue. It is just not good enough, Mr. Deputy Speaker. Will you please get Mr. Speaker here so that the matter can be resolved.

Mr. Deputy Speaker: The hon. Gentleman is quite right. It is within the discretion of the Chair to decide, and there are ways and means, of course, if hon. Members are not satisfied with the jurisdiction of the Chair, but—

Mr. Wigley: Mr. Deputy Speaker—

Mr. Deputy Speaker: Order. I am on my feet. It is not a time for calling Mr. Speaker. Mr. Roy Hughes.

Mr. Wigley: I am sorry, but this is the only recourse that I have available. This is not acceptable. I ask you if you will now call Mr. Speaker into the Chamber at this moment, so that we can have his ruling on the matter.

Mr. Deputy Speaker: The answer to the hon. Gentleman is no. We are going to proceed with the debate. Mr. Roy Hughes.

Mr. Wigley: I am sorry, Mr. Deputy Speaker, but I am not prepared to accept that as a ruling, when the Chair—

Mr. Deputy Speaker: Order—

Mr. Wigley: —when the Chair is gagging the voice of the Chamber for the second time in recent years on the same debate. It is not good enough. I have no confidence in anyone in the Chair who does this.

Mr. Deputy Speaker: Mr. Roy Hughes.

Mr. Wigley: Mr. Deputy Speaker, I am asking you to call Mr. Speaker.

Mr. Deputy Speaker: Order. I have already indicated that—

Mr. Wigley: I am sorry, I am asking you—

Mr. Deputy Speaker: Then I am sorry, but I must warn the hon. Gentleman. He must resume his seat.

Mr. Wigley: I want an undertaking that you will get Mr. Speaker into the Chamber now.

Mr. Deputy Speaker: I must ask the hon. Gentleman to leave the Chamber.

Mr. Wigley: I will remain on my feet, Mr. Deputy Speaker, until you get Mr. Speaker into the Chamber.

Mr. Deputy Speaker: I am sorry, but it is a difficult exercise. I assure the hon. Gentleman that there is no question of the Chair gagging an hon. Member. I have to carry out the orders of the House and the proceedings of the House. In my discretion, I decide who is called in the debate. I understand the hon. Gentleman's strong feelings, but I say to him that he has made his protest. It will certainly be taken note of. Indeed, I shall discuss it with Mr. Speaker, but I do not regard this as an occasion for calling Mr. Speaker. That would be unusual conduct and I ask the hon. Gentleman to bear in mind the consequences if he persists in defying the Chair. I must ask the hon. Gentleman to resume his seat.

Mr. Ray Powell: On a point of order, Mr. Deputy Speaker. May I try to be helpful in this regard? It is not really the fault of the Chair but the fault of the Secretary of State who opened the debate. He knew that we had only 90 minutes yet he took 26 minutes to deliver his speech.

Mr. Deputy Speaker: I regret not being able to call more Back Benchers, but I am in the hands of the House, and I must ask the hon. Member for Caernarfon (Mr. Wigley) to resume his seat. He has made his protest. It will certainly be conveyed to Mr. Speaker. If he persists, he must face the consequences. I must name him.

Mr. Wigley: I am afraid that I do persist. This is the second time that this has happened. Those assurances were given two or three years ago when exactly the same thing happened, and now here it is happening again. It is within the control of the Chair and it is time that the Chair controlled what is happening.

Mr. Deputy Speaker: I am sorry, but I must name Mr. Dafydd Wigley.
Motion made, and Question put forthwith pursuant to Standing Order No. 25 (Order in debate),


That Mr. Dafydd Wigley be suspended from the service of the House.—[Mr. Biffen.]
Question agreed to.
Ordered,
That Mr. Dafydd Wigley be suspended from the service of the House.
The hon. Member withdrew accordingly.

Mr. Roy Hughes: It is an open secret among Members of Parliament that the rate support grant issue is rather complex. Therefore, it is interesting to me that senior people in local government are now also protesting about the complexity of settlements in this area.
Tonight we have had the long and usual dose of dogma from the Secretary of State. Nevertheless, the settlement being debated seems to show an unrealistic provision for local authority spending in Wales in 1986–87. The Secretary of State, on page 3 of the report, has said that he is determined to keep local authority spending within the level of expenditure provision set by the Government. He points out that the grant mechanisms adopted are aimed at discouraging higher levels of expenditure. Yet people in local government know only too well that greater resources are needed if important public services administered by them are to operate at an efficient level.
In appendix 1, page 14, total expenditure is set out at £1,420·9 million, which is a 5 per cent. increase over the existing 1985–86 local authority budgets. But within that, total current expenditure, at £1,368·1 million, is only 3·4 per cent. above the 1985–86 budgets. That is out of line with inflation trends affecting local government.
I remind the Secretary of State that assumptions on pay for 1985–86 were 3 per cent. The reality is that pay costs in 1985–86 are up by 7 per cent., with the teachers' dispute still to be settled.
Throughout local government in Wales there is concern about the expenditure provision for county services which are most likely to be affected by inflation, such as education, social services, police and the fire service. The feeling is that the expenditure provision leaves a gap of over £50 million—about 4·5 per cent. The discrepancy is likely to provide serious problems for our county councils in Wales. For example, the eventual settlement for teachers' pay is hardly likely to fit in with the rate support grant settlement. My contention is that additional resources should be made available to county councils to settle the teachers' dispute. So far there has been no sign that such resources will be forthcoming. The National Union of Teachers, the biggest union in the profession, believes that its members' pay should be determined by application of the Houghton principles used in 1974. The relative level of teachers' pay has declined, but we all know that the demand on teachers is greater than ever. The NUT is determined to fight for proper recognition of the job of teaching.
Where does that leave our county councils? What provision should they make for the pay award due on 1 April next? Teachers' pay increases are hardly likely to fit in with the guidelines in the rate support grant settlement. Will there be additional financial assistance? parents are naturally worried about the dispute, which affects the future of their children. My belief is that the nigger in the woodpile is the Secretary of State for Education and

Science. He is supported by his junior Cabinet colleague, the Secretary of State for Wales. If there was the will, the dispute could be settled quickly. Meanwhile children suffer.
In discussing the rate support grant settlement there is concern about penalties. The position is made difficult because the system is not operating at a realistic level of expenditure. There is a gap of 4·5 per cent. below what our treasurers feel to be necessary. A strong argument can be put for an upward adjustment of the settlement. Treasurers and many local councils, with vast experience of their communities, are calling for a 7 per cent. increase. They believe that that would be more realistic.
Questions are asked about local authorities that underspend. The Welsh Office has suggested that the surplus revenue will be recycled to benefit councils which will then budget for a modest increase in expenditure. The Government are adopting a carrot and stick policy. What a way to treat dedicated people in local government who administer important public services. Such a system restricts freedom of action and curtails local authorities in providing the services they know to be necessary. The response we are getting is that Whitehall knows best. That was the attitude of the Secretary of State tonight.
Today throughout Wales there is a backlog of service inadequacies, particularly from the growing social need caused by rising unemployment. At Question Time we were reminded that unemployment in Wales is 17 per cent., and there is no hope of the figure coming down, especially when the Chancellor presides over a base lending rate of 12·5 per cent.—the highest figure of the century. People are calling for improved social services. The recent Brecon and Radnor by-election bears out that contention. The Chancellor has, nevertheless, repeatedly promised tax concessions. They have become a mirage in the desert. What is needed is a more realistic settlement to enable local authorities to maintain and, where possible, to improve local services. Such action would be of considerable benefit to the people of Wales.

Mr. Nicholas Edwards: The hon. Member for Alyn and Deeside (Mr. Jones) asked why expenditure in Wales should be cut, when England overspends. He seems to have failed to observe that because of the Welsh record the grant percentage has not been cut as much as in England, that the Welsh share of the grant has increased and that Welsh local authorities have received additional capital.
A central issue mentioned by the hon. Member for Alyn and Deeside and by my hon. Friends the Members for Clwyd, North-West (Sir A. Meyer) and for Delyn (Mr. Raffan) relates to the position of Clwyd. Clwyd, of course, is a relatively high spender, with a budget 2 per cent. above GRE for 1985–86. The matters which were well described by my hon. Friend the Member for Clwyd, North-West changed the position between July and the final settlement when we announced it in December.
Throughout the summer we consulted closely with the local authority associations and they should have kept Clwyd, one of their members, fully informed of those discussions, which were based on the need to cap the changes that would affect local authorities. As it happened, West Glamorgan benefited from those changes and Clwyd suffered from them. I do not accept that the position of Clwyd ratepayers has been severely damaged,


as has been suggested. If the increase in expenditure is kept in line with the settlement, the precept could be kept under 5 per cent.
As my hon. Friend the Member for Delyn has repeatedly said, Clwyd had the opportunity to cut expenditure. It has not cut the numbers employed and it is now facing some difficulties as a result, but I believe that they are exaggerated.
The settlement for Wales as a whole is extremely good. Welsh local authorities know that as a result of good performance in the past they have a settlement that gives them a great deal.

It being one and a half hours after the commencement of proceedings, MR. DEPUTY SPEAKER put the Question pursuant to Standing Order No. 3 (Exempted Business).

The House divided: Ayes 280, Noes 167.

Division No. 42]
[1.10 am


AYES


Aitken, Jonathan
Currie, Mrs Edwina


Alexander, Richard
Dickens, Geoffrey


Amess, David
Dorrell, Stephen


Ancram, Michael
Douglas-Hamilton, Lord J.


Arnold, Tom
Dover, Den


Ashby, David
du Cann, Rt Hon Sir Edward


Aspinwall, Jack
Dunn, Robert


Atkins, Robert (South Ribble)
Durant, Tony


Atkinson, David (B'm'th E)
Edwards, Rt Hon N. (P'broke)


Baker, Nicholas (Dorset N)
Eggar, Tim


Baldry, Tony
Evennett, David


Batiste, Spencer
Eyre, Sir Reginald


Bellingham, Henry
Fallon, Michael


Bendall, Vivian
Fenner, Mrs Peggy


Best, Keith
Finsberg, Sir Geoffrey


Bevan, David Gilroy
Fletcher, Alexander


Biffen, Rt Hon John
Fookes, Miss Janet


Blackburn, John
Forman, Nigel


Blaker, Rt Hon Sir Peter
Forsyth, Michael (Stirling)


Body, Sir Richard
Forth, Eric


Bonsor, Sir Nicholas
Fowler, Rt Hon Norman


Bottomley, Peter
Fox, Marcus


Bottomley, Mrs Virginia
Franks, Cecil


Bowden, A. (Brighton K'to'n)
Fraser, Peter (Angus East)


Bowden, Gerald (Dulwich)
Freeman, Roger


Boyson, Dr Rhodes
Fry, Peter


Brandon-Bravo, Martin
Gale, Roger


Bright, Graham
Gardner, Sir Edward (Fylde)


Brinton, Tim
Garel-Jones, Tristan


Brittan, Rt Hon Leon
Glyn, Dr Alan


Brooke, Hon Peter
Goodlad, Alastair


Brown, M. (Brigg &amp; Cl'thpes)
Gorst, John


Browne, John
Gow, Ian


Bruinvels, Peter
Gower, Sir Raymond


Bryan, Sir Paul
Greenway, Harry


Bulmer, Esmond
Gregory, Conal


Burt, Alistair
Griffiths, Peter (Portsm'th N)


Butcher, John
Grist, Ian


Butler, Rt Hon Sir Adam
Ground, Patrick


Butterfill, John
Grylls, Michael


Carlisle, John (Luton N)
Hamilton, Hon A. (Epsom)


Carlisle, Kenneth (Lincoln)
Hamilton, Neil (Tatton)


Carlisle, Rt Hon M. (W'ton S)
Hanley, Jeremy


Cash, William
Hannam, John


Channon, Rt Hon Paul
Harris, David


Chapman, Sydney
Hawkins, Sir Paul (N'folk SW)


Chope, Christopher
Hawksley, Warren


Churchill, W. S.
Hayward, Robert


Clark, Hon A. (Plym'th S'n)
Heathcoat-Amory, David


Clark, Sir W. (Croydon S)
Henderson, Barry


Clarke, Rt Hon K. (Rushcliffe)
Higgins, Rt Hon Terence L.


Colvin, Michael
Hill, James


Conway, Derek
Hirst, Michael


Coombs, Simon
Hogg, Hon Douglas (Gr'th'm)


Cope, John
Holland, Sir Philip (Gedling)


Couchman, James
Holt, Richard


Crouch, David
Howard, Michael





Howarth, Alan (Stratf'd-on-A)
Patten, Christopher (Bath)


Howarth, Gerald (Cannock)
Patten, J. (Oxf W &amp; Abdgn)


Howell, Ralph (Norfolk, N)
Pawsey, James


Hubbard-Miles, Peter
Percival, Rt Hon Sir Ian


Hunt, David (Wirral, W)
Pollock, Alexander


Hunt, John (Ravensbourne)
Portillo, Michael


Hunter, Andrew
Powell, William (Corby)


Hurd, Rt Hon Douglas
Powley, John


Jackson, Robert
Raison, Rt Hon Timothy


Jessel, Toby
Rathbone, Tim


Johnson Smith, Sir Geoffrey
Rees, Rt Hon Peter (Dover)


Jones, Gwilym (Cardiff N)
Rhodes James, Robert


Jones, Robert (Herts W)
Rhys Williams, Sir Brandon


Joseph, Rt Hon Sir Keith
Ridley, Rt Hon Nicholas


Kellett-Bowman, Mrs Elaine
Rifkind, Rt Hon Malcolm


Key, Robert
Roberts, Wyn (Conwy)


King, Roger (B'ham N'field)
Robinson, Mark (N'port W)


Knight, Greg (Derby N)
Roe, Mrs Marion


Knight, Dame Jill (Edgbaston)
Rossi, Sir Hugh


Knowles, Michael
Rowe, Andrew


Knox, David
Rumbold, Mrs Angela


Lamont, Norman
Ryder, Richard


Lang, Ian
Sackville, Hon Thomas


Latham, Michael
Sainsbury, Hon Timothy


Lawler, Geoffrey
Sayeed, Jonathan


Lawrence, Ivan
Shaw, Giles (Pudsey)


Lawson, Rt Hon Nigel
Shaw, Sir Michael (Scarb')


Lee, John (Pendle)
Shelton, William (Streatham)


Leigh, Edward (Gainsbor'gh)
Shepherd, Richard (Aldridge)


Lennox-Boyd, Hon Mark
Shersby, Michael


Lester, Jim
Silvester, Fred


Lewis, Sir Kenneth (Stamf'd)
Sims, Roger


Lightbown, David
Smith, Tim (Beaconsfield)


Lilley, Peter
Soames, Hon Nicholas


Lloyd, Peter (Fareham)
Spence, John


Lord, Michael
Spencer, Derek


Luce, Rt Hon Richard
Spicer, Jim (Dorset W)


Lyell, Nicholas
Spicer, Michael (S Worcs)


McCurley, Mrs Anna
Squire, Robin


MacGregor, Rt Hon John
Stanbrook, Ivor


MacKay, Andrew (Berkshire)
Stanley, Rt Hon John


MacKay, John (Argyll &amp; Bute)
Steen, Anthony


Maclean, David John
Stern, Michael


McNair-Wilson, M. (N'bury)
Stevens, Lewis (Nuneaton)


McQuarrie, Albert
Stewart, Allan (Eastwood)


Major, John
Stewart, Andrew (Sherwood)


Malins, Humfrey
Stewart, Ian (Hertf'dshire N)


Malone, Gerald
Stokes, John


Maples, John
Stradling Thomas, Sir John


Marland, Paul
Taylor, Teddy (S'end E)


Marlow, Antony
Terlezki, Stefan


Maude, Hon Francis
Thomas, Rt Hon Peter


Mawhinney, Dr Brian
Thompson, Donald (Calder V)


Mayhew, Sir Patrick
Thompson, Patrick (N'ich N)


Mellor, David
Thorne, Neil (Ilford S)


Miller, Hal (B'grove)
Thornton, Malcolm


Mills, Iain (Meriden)
Thurnham, Peter


Moate, Roger
Townsend, Cyril D. (B'heath)


Monro, Sir Hector
Tracey, Richard


Montgomery, Sir Fergus
Trippier, David


Moore, Rt Hon John
Trotter, Neville


Morris, M. (N'hampton, S)
Twinn, Dr Ian


Morrison, Hon P. (Chester)
van Straubenzee, Sir W.


Moynihan, Hon C.
Vaughan, Sir Gerard


Mudd, David
Viggers, Peter


Neale, Gerrard
Waddington, David


Needham, Richard
Wakeham, Rt Hon John


Neubert, Michael
Walden, George


Nicholls, Patrick
Walker, Bill (T'side N)


Normanton, Tom
Waller, Gary


Norris, Steven
Ward, John


Onslow, Cranley
Wardle, C. (Bexhill)


Oppenheim, Phillip
Warren, Kenneth


Oppenheim, Rt Hon Mrs S.
Watts, John


Osborn, Sir John
Wells, Bowen (Hertford)


Ottaway, Richard
Wells, Sir John (Maidstone)


Page, Sir John (Harrow W)
Wheeler, John


Page, Richard (Herts SW)
Whitfield, John


Parkinson, Rt Hon Cecil
Whitney, Raymond


Parris, Matthew
Wilkinson, John






Wolfson, Mark
Younger, Rt Hon George


Wood, Timothy



Woodcock, Michael
Tellers for the Ayes:


Yeo, Tim
Mr. Carol Mather and


Young, Sir George (Acton)
Mr. Robert Boscawen.




NOES


Adams, Allen (Paisley N)
Cunningham, Dr John


Anderson, Donald
Dalyell, Tam


Archer, Rt Hon Peter
Davies, Rt Hon Denzil (L'lli)


Ashdown, Paddy
Davis, Terry (B'ham, H'ge H'l)


Ashley, Rt Hon Jack
Deakins, Eric


Ashton, Joe
Dewar, Donald


Atkinson, N. (Tottenham)
Dixon, Donald


Bagier, Gordon A. T.
Dobson, Frank


Banks, Tony (Newham NW)
Dormand, Jack


Barnett, Guy
Douglas, Dick


Barron, Kevin
Dubs, Alfred


Bell, Stuart
Dunwoody, Hon Mrs G.


Benn, Rt Hon Tony
Eadie, Alex


Bennett, A. (Dent'n &amp; Red'sh)
Eastham, Ken


Bermingham, Gerald
Evans, John (St. Helens N)


Bidwell, Sydney
Ewing, Harry


Blair, Anthony
Fatchett, Derek


Boyes, Roland
Field, Frank (Birkenhead)


Bray, Dr Jeremy
Fields, T. (L'pool Broad Gn)


Brown, Gordon (D'f'mline E)
Fisher, Mark


Brown, Hugh D. (Provan)
Flannery, Martin


Brown, N. (N'c'tle-u-Tyne E)
Foot, Rt Hon Michael


Brown, R. (N'c'tle-u-Tyne N)
Forrester, John


Brown, Ron (E'burgh, Leith)
Foster, Derek


Buchan, Norman
Foulkes, George


Caborn, Richard
Fraser, J. (Norwood)


Callaghan, Jim (Heyw'd &amp; M)
Freeson, Rt Hon Reginald


Campbell-Savours, Dale
Garrett, W. E.


Carlile, Alexander (Montg'y)
George, Bruce


Clark, Dr David (S Shields)
Gilbert, Rt Hon Dr John


Clarke, Thomas
Godman, Dr Norman


Clay, Robert
Gould, Bryan


Clelland, David Gordon
Hamilton, James (M'well N)


Clwyd, Mrs Ann
Hardy, Peter


Cocks, Rt Hon M. (Bristol S.)
Harman, Ms Harriet


Cohen, Harry
Harrison, Rt Hon Walter


Coleman, Donald
Hart, Rt Hon Dame Judith


Conlan, Bernard
Haynes, Frank


Cook, Frank (Stockton North)
Hogg, N. (C'nauld &amp; Kilsyth)


Corbett, Robin
Holland, Stuart (Vauxhall)


Craigen, J. M.
Home Robertson, John


Crowther, Stan
Howell, Rt Hon D. (S'heath)


Cunliffe, Lawrence
Hoyle, Douglas





Hughes, Roy (Newport East)
Radice, Giles


Hughes, Simon (Southwark)
Randall, Stuart


Janner, Hon Greville
Redmond, Martin.


John, Brynmor
Rees, Rt Hon M. (Leeds S)


Jones, Barry (Alyn &amp; Deeside)
Richardson, Ms Jo


Kilroy-Silk, Robert
Roberts, Ernest (Hackney N)


Lambie, David
Robertson, George


Lamond, James
Rogers, Allan


Leadbitter, Ted
Rowlands, Ted


Leighton, Ronald
Sedgemore, Brian


Litherland, Robert
Sheldon, Rt Hon R.


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Short, Ms Clare (Ladywood)


Loyden, Edward
Silkin, Rt Hon J.


McDonald, Dr Oonagh
Skinner, Dennis


McKay, Allen (Penistone)
Smith, C.(Isl'ton S &amp; F'bury)


MacKenzie, Rt Hon Gregor
Smith, Rt Hon J. (M'ds, E)


McNamara, Kevin
Snape, Peter


McTaggart, Robert
Soley, Clive


McWilliam, John
Spearing, Nigel


Madden, Max
Stott, Roger


Marek, Dr John
Strang, Gavin


Marshall, David (Shettleston)
Straw, Jack


Martin, Michael
Thomas, Dafydd (Merioneth)


Maxton, John
Thomas, Dr R. (Carmarthen)


Maynard, Miss Joan
Thompson, J. (Wansbeck)


Meacher, Michael
Thorne, Stan (Preston)


Michie, William
Tinn, James


Mikardo, Ian
Wallace, James


Millan, Rt Hon Bruce
Wardell, Gareth (Gower)


Miller, Dr M. S. (E Kilbride)
Wareing, Robert


Morris, Rt Hon A. (W'shawe)
Weetch, Ken


Morris, Rt Hon J. (Aberavon)
Welsh, Michael


Nellist, David
White, James


Oakes, Rt Hon Gordon
Williams, Rt Hon A.


O'Brien, William
Winnick, David


O'Neill, Martin
Woodall, Alec


Orme, Rt Hon Stanley
Wrigglesworth, Ian


Park, George



Pavitt, Laurie
Tellers for the Noes:


Pendry, Tom
Mr. Ray Powell and


Pike, Peter
Mr. Ron Davies.


Prescott, John

Question accordingly agreed to.

Resolved,
That the Welsh Rate Support Grant Report 1986–87 (House of Commons Paper No. 100), which was laid before this House on 18th December, be approved.

Opencast Mining

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]

Mr. Lawrence Cunliffe: First of all, may I place on record my gratitude to the Minister for responding so quickly to what is in essence an emergency debate. I apologise to the House on behalf of my hon. Friend the Member for Worsley (Mr. Lewis), who is ill with influenza and unable to be here. I managed to bridge the gap and I shall speak on opencast mining and the 10-year draft plan of the National Coal Board for the greater Manchester area.
I have a special interest in this debate because I am the chairman of the miners' parliamentary group and a member of the national executive of the National Union of Mineworkers. I am also the energy Whip of my party. I want it clearly understood that I shall be speaking first about the adverse effects opencast mining has had on the lives of ordinary people in the greater Manchester area for something like 150 years. I shall also speak about whether opencast mining has a useful part to play in the energy requirements of our nation.
It is known that during the unfortunate period of strife and trauma that the mining industry recently endured, some people took the view that it would not have come about if the Government's energy policy had fully taken into account that we have in coal an indigenous fuel with a potential of some 300 years' supply. That could be used at the proper time for our energy requirements. It is a vital natural resource and should be safeguarded and used only when it is necessary to do so.
The Minister will know that opencast mining was an emergency undertaking that complemented deep coal mining after the second world war. From about 1946–47 it found its place within our global target of coal production in the nationalised industry run by the National Coal Board.
Opencast mining was never meant to be a substitute for deep coal mining. Unfortunately, it is now considered an asset, not in the sense that it is considered imperative that we get the coal, but in the sense that it is a cheap form of fuel that is quickly mined and, as we say, in the wagon, with the money in the bank in a few days or a few weeks. I am a former mining engineer and I know that eight to 10 years is required to sink a pit. Before it becomes economic and fruitful it needs a considerable amount of planning and deep coal mining is much more expensive than opencast mining.
I do not believe—nor, at times, do the Government—that we have a rational national energy policy that considers all types of fuels in the context of global requirements. Thousands of ordinary householders are suffering because of this great intrusion into their lives which is causing, in their opinion and that of my colleagues, wholesale havoc and devastation. Visual amenities, repairs to services, local infrastructure—roads, sewers, and so on—and rural areas have been affected. Partly rural areas have been spoiled, as we noted during the long public inquiry on behalf of a Member of the other place. It was conceded at the end of the inquiry that the environmentalists were half right and that the applicant was right also.
There is no doubt about the disturbance, noise, dirt and constant problems where opencast mining occurs in residential areas. I should like to make some suggestions which might mitigate some of the hardship suffered. Properties are sometimes affected by large schemes for as long as 15 years. That is an inordinate period during which householders have to put up with the problem. When they purchase their houses, they often do not dream that they will become the victim of such an environmental intrusion into their lives.
I shall give a classic example of one development which affects three sides of my constituency—the Leigh, Atherton and Tyldesley townships. The project involves 11 years of excavation and five years reclamation. People at the end of the site, as are some of my constituents, expect to be adversely affected for 16 years, if the NCB's targeted time scale is met. That is unreasonable. Through no fault of their own, my constituents are the victims of this cruel series of events.
There is a 10-year plan which involves a strategy plan, based on identified sites and areas of search in the mining communities. The sites suggested in the draft mineral local plan for the greater Manchester area basically surround the perimeter of Wigan and adjoining authority areas and penetrate into greater Manchester. They do not include potential opencast sites that have already been identified. This means that the areas have been identified by the NCB opencast executive as "areas of current interest", which is not quite the same as "identified sites". Obviously, this causes extreme concern to the residents, and all the protection groups that have formed in that vast area of search. They are worried that, some 40 or 50 years afterwards, they could be landed with opencast mining for the next half century. I am being quite logical about this point, and I am not being speculative, because I know the area. Such a proposition would be a nightmare to ordinary people. There are examples in the area to show that this has happened before.
One of the problems is that the weak substrata could be in residental areas. Neither the Government nor the local authorities have ever commissioned a proper, in-depth, independent geological survey of the areas built on such substrata. This evening I was looking at the history of a pit in my constituency, dealing with what happened there 198 years ago. I shall not bore the House with the details of what happened. However, one third of the pit is within the site about which we are talking, which will produce about 2 million tonnes of opencast coal within the next 16 years.
The problem is that no one is responsible for seeing what could happen when an area that has been honeycombed for the past 200 years with 300 mineshafts within a radius of five miles is worked again. One of the problems is that no direct geological survey is made. It is possible that geological movements would be triggered off from the dozens of old mine workings.
I understand the problems. The Minister came to help out in haste, and some of the blame lies with the Department of the Environment, and is not his responsibility. It is fair, sensible, and should be obligatory, that all those who apply—whether it is the National Coal Board or any private applicant—for permission to mine an area, should present to the authority an independent geological survey of the area. It will then be up to the local authority, the councillors of which will be briefed on the data available, to make its judgment on


an application. That would be a more fair and honest method. A judgment could be made more rationally and soundly. The NCB, which is the main applicant for planning permission to mine such areas, will then be responsible for those areas.
The NCB always uses the phrase, "There is no evidence to suggest." On the other hand, there has been no positive planning identification by the National Coal Board that allows it to say, hand on heart, that old mineworkings in that area will not cause disturbance.
New arrangements were introduced in 1984. They are the subject of circular 3/84 from the Department of the Environment. It places opencast mining fairly and squarely within the planning system and all that flows from that. Compensation should be paid to those communities from whose area coal is removed. Financial recompense should be made to the communities that have borne the brunt of mining operations. I have already described the adverse effects of opencast coalmining, which are fully acknowledged in paragraph 20 of the Government circular. It says that local planning authorities will need to consider how best high standards of management and operation of sites might be achieved through measures agreed with the industry. It states that the agreements provided for in section 52 of the Coal Industry Act 1971 are to be enforced by means of the planning conditions. It is, however, clear that the possibility of securing compensation cannot be dealt with in that way. Therefore I implore the Parliamentary Under-Secretary of State for Energy to consult the Department of the Environment and to suggest that, where mining takes place, an amount should be calculated, as compensation to the local authorities and to the areas and communities concerned, as a percentage of the value of recovered coal. I believe that that would be an honest criterion. If opencast mining must be imposed on the population in this area, compensation should be paid to them.
The National Coal Board should agree in principle to accept its responsibility to help local communities. If such an agreement could be obtained, we would be on the first rung of the ladder towards the introduction of legislation to provide protection and some degree of recompense for the great environmental intrustions caused by opencast mining.
I stress again that the extent of underground mining activities in areas such as these has been so great that much of it is unrecorded, while other records no longer exist. An area that had been subject to subsidence but which appeared to have been stabilised was considered by the planning authorities to be suitable as building land. Residential and other types of property now stand upon that land. These are worn-out areas. We are referring to areas which for 250 years have been subject to the kind of activities that I have described. It is only right, when our national energy resources are being planned, that relief of some kind should be provided. Either monetary relief or better planning conditions should be introduced to safeguard the interests and the environment of these communities. I commend to the House and the various Departments my suggestions about trying to help and to grant some kind of sustenance, especially to those who, unfortunately, have to suffer that type of ordeal.
I mentioned long periods of perhaps 15 or 20 years, but an average is about five to 10 years. Nevertheless, there are exceptional circumstances and I hope that the Minister will consider my arguments carefully.

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I join the hon. Member for Leigh (Mr. Cunliffe) in saying how sad we are that the hon. Member for Worsley (Mr. Lewis) is unwell. I hope that he makes a speedy recovery to full health.
I congratulate the hon. Member for Leigh on his ingenuity and skill in securing this debate at short notice. He mentioned his various qualifications—chairman of the miners parliamentary group, member of the National Union of Mineworkers national executive and a Whip. He has had a distinguished career in the coal industry and has a breadth of experience and expertise that I respect.
The Government's energy policy has been clearly stated on many occasions. We recognise that this country is fortunate to have the four major options available—oil, nuclear energy, gas and coal. Our policy is to keep each of those options active and developing.
I am grateful to the hon. Gentleman for raising the question of opencast coal because that has a vital role to play in securing a healthy future for the coal industry. At one stage the hon. Gentleman sought to suggest that we should cut back on opencast coal in order that it may be replaced by more deep-mined production. However, that makes no sense from either an operational or a financial point of view. When I visited the opencast executive in Mansfield last year, I was impressed by its operations and by the people that I met. The opencast arm of the NCB has been operating effectively and profitably for many years. The NCB needs the coal that it produces. The private opencast sector also has an important contribution to make. I emphasise that the NCB's deep-mined and opencast operations are not competing with each other but are complementary. The quality of coal in some deep mines is such that they would simply have to close if there were no opencast coal to blend with it.
The chlorine content of coal increases with depth. Deep-mined coal often has too high a chlorine content for use in power stations. Chlorine can cause fouling and corrosion in boilers and kilns. Opencast low-chlorine coal is being used increasingly to blend with deep-mined high-chlorine coal to make it acceptable to the user, particularly in the power generation market.
A second reason why opencast mining is so vital in this country is that it is an important source of specialised coal. Almost half of the United Kingdom's production of anthracite is extracted by the opencast method. Demand is also just as high for prime coking coal. Although opencast coking coal reserves are limited, production is being expanded as far as possible, because opencast coking coal directly displaces foreign imports. All the qualities of opencast coal—cleanness, moisture and chlorine content, lack of dust—also make it very attractive to a sector that the NCB sees as a very important growth area—the industrial market.
Thirdly, we must not underestimate the significant cost advantages which opencast coal offers over deep-mined coal. In 1984–85, the average cost of production for opencast coal was £28·43 a tonne—considerably lower than the average cost of deep-mined coal.


I hope that I have demonstrated to the House just how much, and why, we need coal produced by opencasting. In 1983–84, the pre-strike year, opencasting produced just under 14·5 million tonnes, or about 13 per cent. of the National Coal Board's total output. This year's pattern will be similar. Because of its special characteristics and qualities, the greater part of opencast coal simply could not be replaced by deep-mined output.
The hon. Gentleman referred especially to developments in the Greater Manchester area, and the Lomax site, which includes the Bank House farm opencast site. I understand that the NCB is lodging an application for planning for the Bank House farm site. In the first instance, this is a matter for the local mineral planning authority, and it would not be appropriate for me to comment on the planning merits of the case. But the hon. Gentleman raised some specific points on procedure, including the lodging of independent geological surveys. It is for the applicant to decide what supportive evidence is required, but equally it is a matter for the local planning authorities to decide whether they wish to employ consultants to carry out independent geological assessments or surveys. But, of course, the hon. Gentleman is right to stress that one must have regard to the overall complications caused by previous mining in the operations in respect of which planning permission is sought.
On the issue of general recompense for the community, I do not think that the hon. Gentleman expects me to hold out any hope of movement in that direction, but I shall consider the points that he raised and draw them to the attention of my colleagues in the Department of the Environment.
The hon. Gentleman mentioned help to communities. Many grants are available to communities that have been hit by previous mining blight—deep-mined or opencast—in the form of derelict land grant and others. This debate comes at a time when, in the Upper Waiting Hall, we have an exhibition by NCB (Enterprise) Ltd, which demonstrates the board's real concern for communities.
It is, of course, equally important to ensure that opencast coal is not produced at an unacceptable cost to the environment. The planning process is specifically designed to ensure that the coal produced from a specific

site is extracted with the minimum environmental disruption. Often, when planning permission is granted for an opencast site, careful planning conditions are laid down to ensure that adequate screening and baffling are provided; and the number of trucks visiting the site may be controlled. But, unlike conventional deep mines, which may have lives of up to 100 years, an opencast site can be worked often in only a few years, reducing the periods of disruption.
Opencast sites are restored to a high stnadard by the NCB's opencast executive. This is a complex, thorough going and often expensive process. The contours of the land are shaped by replacing soil and subsoils, and land intended for agriculture has water supplies, drinking troughs, fences and hedges replaced or even supplied for the first time. That is followed by the installation of permanent underdrainage. Often, the site is improved well beyond its original condition. If not required for agricultural use, the land can be contoured to the specifications of the local authority for a wide variety of leisure and recreational purposes.
In 1985, £14 million was spent by the NCB on site restoration after opencasting. That represents a significant proportion of total production costs at such sites, but is regarded by the opencast executive as an essential part of the process of coal extraction by opencast methods. It is almost impossible to tell, in many cases, that only a few years before a major extraction site was present. In this way, the country gets the best of both worlds: not only is a valuable resource extracted cheaply and efficiently over a short time span, but the land is restored or improved so that what might have been environmental costs become tangible environmental benefits.
There can be no doubt that deep-mined coal will continue to provide the main part of the National Coal Board's output. But, equally, opencast coal has a vital, complementary and continuing role to play in the future of the coal industry—

The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eleven minutes to Two o'clock.